November Questions and Answers

Newsletter issue – November 2024

Q: I own some agricultural properties that I hope to pass on to my sons when the time comes, but I’ve heard that there might be changes in the upcoming Budget. What are the current rules for Agricultural Property Relief on Inheritance Tax, and what might change?

A: Currently, Agricultural Property Relief (APR) allows you to pass on agricultural property free from Inheritance Tax (IHT), provided the property meets HMRC's qualifying conditions. To qualify, the property must be used for agricultural purposes, such as land for crops, pasture for livestock, or certain buildings like farmhouses and cottages. The property must also have been owned and used for agricultural purposes for at least two years if farmed by the owner or their spouse, or for seven years if let out to someone else. Additionally, the size and nature of buildings must be appropriate to the agricultural activity to qualify, and the relief only covers the agricultural value of the property - not the market value if it exceeds the agricultural value, such as a farmhouse that could be sold as a residence.

The relief is generally available at 100% if the land is actively farmed or let under a qualifying tenancy, but in other cases, such as older tenancies, relief may only be available at 50%.

However, speculation about the upcoming Budget suggests there may be changes to IHT, including potentially removing the favourable treatment for agricultural and business property. If this happens, your agricultural properties could face higher IHT charges, as they may no longer qualify for this relief.

It's a good time to review your estate planning.

Q: My husband has been in full-time employment for many years and hasn’t had to deal with Self-Assessment Tax Returns until now. Recently, he started doing some freelance work alongside his job. What should he know about filing taxes for his freelance income, and are there any special considerations for someone in his position?

A: Many people are in the same boat and it's important for him to understand how to handle his tax obligations.

Since he's earning additional income from freelancing, he'll need to report this on a Self-Assessment Tax Return if his earnings exceed £1,000. This threshold allows him to earn up to £1,000 from freelancing without needing to file a tax return for that income, which can be beneficial for small side jobs.

For those in a situation like your husband's, there's a potentially helpful option if the total tax liability from self-employment is £3,000 or less. If he qualifies, he can request to have this amount collected through his PAYE tax code, allowing the tax owed to be deducted from his salary in manageable monthly instalments rather than as a lump sum.

To take advantage of this payment method, he needs to be proactive. He must complete and submit his online tax return by 30 December following the end of the tax year. Meeting this deadline is crucial for ensuring that the tax adjustment can be applied to his PAYE code for the upcoming year.

Q: I'm planning to go back to work next year after maternity leave, and I've heard about changes to the free childcare scheme. What should I expect, and are these plans still going ahead with the new government?

A:You're right to enquire because there have been significant changes to the free childcare scheme, and further expansions are planned.

Previously, working parents with children aged three and four were entitled to 30 hours of free childcare per week, though this was reduced to 15 hours if either parent had an income of £100,000 or more.

Starting from April 2024, parents of two-year-olds have qualified for 15 hours of free childcare, with the scheme expanding further in September 2024 to include children as young as nine months old.

From April 2024, working parents with two-year-olds have been eligible for 15 hours of free childcare per week. As of September, this has been extended to parents with children as young as nine months.

By September 2025, under the previous government, the plan was to roll out 30 hours of free childcare per week for working parents of children from nine months to three years during term time. However, parents earning more than £100,000 will be limited to 15 hours per week.

Labour has indicated it would continue to back this plan. However, the new government has also committed to reviewing childcare, with the new Education Secretary raising concerns about funding and capacity issues in the system. So, we'll need to keep an eye out for any potential updates or adjustments over the coming year. It's even possible something will be clarified or announced on 30 October at the Budget.