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May 15, 2014updated 11 Jan 2016 2:13pm

With a mountain up for sale, how to avoid selling off your own estate

By Spear's

As has been mentioned across the popular press, Lord Lowther is presently trying to sell a Lake District mountain, Blencathra, with a lordship of the manor thrown in for good measure, for £1.75 million to help settle the inheritance tax payable as a result of his father’s death.

This is not the first, nor will it be the last, estate where the new owner has been left in a difficult position by death duties and is forced to sell assets closely associated with or integral to the estate. So what should families with landed estates do to avoid ending up in the position faced by Lord Lowther?

The short answer is to plan strategically for the estate’s exposure to inheritance tax and do so as soon as possible. There is no universal panacea to the problem of death duties but if those responsible for the estate formulate a plan there is a greater prospect of doing so successfully.

They also need to bear in mind that tax rules are liable to change even in the short term, let alone over the long time horizon of a landed estate, and so try to build some flexibility into the plan.

Which thoughts should families with landed estates weave into their planning at present?

> Try to take advantage of inheritance tax reliefs;

> Plan for the funding of inheritance tax in any ways that are appropriate; and

> Consider ownership of assets through trusts and the predictability of tax charges that ‘relevant property’ trusts bring.

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Inheritance tax ‘agricultural property relief’ and ‘business property relief’ have been at the most favourable rates for many years but may not apply so favourably forever. Families may wish to make transfers for the benefit of the next or succeeding generations which lock in to reliefs as they are currently available.

On a similar note, families might try to organise matters so that assets are part of a business; this creates the prospect of ‘business property relief’ at its current rate of 100 per cent being available when otherwise it might not be. (Although HMRC take issue with this, the use of assets in a ‘house opening business’ may also achieve significant CGT advantages if the family feel the need to sell the asset.)

The reliefs may also provide the opportunity for getting assets into a trust without a significant IHT ‘entry charge’ if the family want to move in that direction.


It is unlikely the reliefs will always be a complete answer to the problem of death duties. Similarly, transfers from one generation to another or to trusts are never going to be completely successful in eradicating death duties.

So, estates should look to create liquid assets where they can, without prejudicing the integrity of the core estate. Estates should hire quality advisers who may be able to spot non-core areas of land which are capable of development (perhaps subject to suitable investment of time and money) and generating liquidity for the estate.

They should also incorporate life assurance planning into the equation. If insurance on an individual is taken out at a young age the rates available may make this an attractive component of the strategic plan. Bear in mind that you cannot realistically embark on that sort of planning when the individual to be insured is in their forties or fifties.

Sometimes, though, it will be necessary to sell a chattel or a ‘piece of the family silver’ – if so, the family needs to maximise what it receives. The planning needs to be careful and, among other things, to take into account past ‘conditional exemption’.


Inheritance tax on ‘relevant property’ trusts is not influenced by whether an individual has died – there are ten year charges (maximum rate currently 6 per cent) and exit charges. Since inheritance tax on some assets is payable over ten years by annual instalments, ‘relevant property’ trusts may offer some welcome predictability and regularity of cash outflow in terms of the payment of tax.

As I have mentioned, there is certainly no one-size-fits-all solution; the key is for families to think strategically and tactically in order to make the best of their situations.

John Goodchild is head of private wealth at Pemberton Greenish

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