Contents
- News in brief
- Stormy waters for British woodland
- Registration of manorial mineral rights
- Cultural Gifts Scheme
News in brief
- The question of the applicability of agricultural property relief on farmhouses has recently been considered again by the courts. In Hanson, the First-tier Tribunal found in favour of the taxpayer,. It was held that, contrary to HMRC guidance, although the farmhouse and the land had to be in common occupation, common ownership was not a requirement for the character appropriate test.
- The farmhouse test was also considered last November when the 2010 decision in the Atkinson case was overturned in HMRC's favour. The First-tier Tribunal decision was reversed on the basis that visiting the farmhouse for farm partnership discussions, whilst living in a care home, was not sufficient for the farmhouse to have been 'occupied for the purposes of agriculture'.
- In a recent meeting of Parliament's European Committee Mr Paice, Minister of State for Agriculture and Food, noted that if the proposed reform of farm subsidies was implemented, about 500 holdings in the UK would be affected by 'capping'. Meanwhile, on the suggested 'farming income' test, those who recall the chaos caused by RPA computer systems in the last round of reforms will agree with Mr Paice's comment that 'the idea of the RPA computer talking to the Inland Revenue computer to find out which people have earned 5% makes a chill run up one's spine'.
Stormy waters for British woodland
The past century has seen a number of severe plant diseases introduced into the UK's forests and gardens, leading to growing concern for the future of native woodland in the face of exotic plant pathogens arriving from abroad. The latest serious threat to cause alarm in the UK is the fungal-like pathogen, Phytophthora ramorum, otherwise known as 'sudden oak death'.
Phytophthora ramorum is threatening Larch woodland in Southern England and Wales. In 2011, almost 10,000 acres of woodland were affected by the Forestry Commission programme designed to stave the spread of the disease. It resulted in the loss of 4 million Larch trees across the region, but further outbreaks continue to cause concern.
The Forestry Commission has three heads of compensation available that are designed to assist with the effects of Statutory Plant Health Notices (SPHN), served to prescribe special measures for infected sites.
Assistance with clearance
Where an SPHN requires the clearing of Larch below the age of marketable maturity (below 25 years), a payment is available of:
- £300 per hectare where the woodland can be cleared with a clearing saw; or
- £1,500 per hectare where the woodland requires mechanised clearing. Eligibility for this payment will be determined by the Woodland Officer during their site visit when they agree the terms of the SPHN. This payment is not available where the Landowner recovers and sells the timber which has been subject to the SPHN.
Woodland Regeneration Grant supplement
To support replanting after felling that has been required by an SPHN, a supplement of £1,500 per hectare is available. However, this is subject to timing criteria.
Further assistance
Rhododendron has been linked to the proliferation of the disease. Where a Landowner (a) is within a 3km radius of land served with an SPHN and (b) observes the general criteria and conditions for Woodland Improvement Grants as published by the Forestry Commission, they will be eligible to apply for financial assistance to assist with the removal of Rhododendron. This is an 80% contribution to the standard costs of treatment for Rhododendron infestation. Every cloud has a silver lining!
Registration of manorial mineral rights under former copyhold land
From 13 October 2013, rights reserved to the lord of the manor will cease to be legally overriding interests when that land is sold, unless they are registered at the Land Registry. This means that once an arm's length purchaser has paid to buy the property over which the lord of the manor could exercise the rights, the lord's rights will be lost forever.
Manorial rights are not the rights which might have been expressly reserved out of sales from Estates. Those rights are of a different legal type and are not affected by the 2013 date. The rights to be registered are those relating to freehold land which used to be held as 'copyhold'. Copyhold is an ancient form of land tenure where the occupant held the land as a tenant of the lord of the manor. After 1840, most copyholders were able to obtain the freehold of their land, a process known as enfranchisement. During the enfranchisement, some lords of the manor, although not all of them, reserved rights over the copyhold land to themselves. The rights reserved of particular interest to modern landowners are mineral and sporting rights.
We have been approached by several Estates who are interested in investigating whether they have manorial rights worth registering. The first step is to establish what rights, if any, exist and are documented. This requires:
- a brief review of the Settled Land Act vesting deeds for the Estate to see if any manors are listed;
- an investigation at the public records office at Kew or online to see if there are any court books for the manors for the relevant period (post 1840). The records are online for some counties, but not all;
- a review of the court books at the county records office or in the Estate archives, if held there, to look for possible copyhold land; and
- a review of a selection of the copyhold records to see if the manor was one which by custom reserved rights such as mineral or sporting rights. Assuming the initial steps are successful, the next stage would involve going through the individual records and matching the copyhold land against modern OS plans so that title could be deduced to the Land Registry and the rights registered. This is a more time consuming exercise than the initial review. However, it would be worth carrying out the registration if it looked as though there were significant parcels of open land with manorial minerals or other valuable rights reserved to the lord of the manor.
"...the 2013 date."
Cultural Gifts scheme
Under the current Acceptance in Lieu scheme, taxpayers can offer to transfer objects, land and buildings of cultural or historical importance into public ownership in full or part payment of their liability to inheritance tax. The scheme has its origins in the early twentieth century when the 1910 Finance Act first allowed the acceptance of objects by the nation in settlement of what was then known as Estate Duty. Over 100 years later, the scheme is still thriving and in recent years c.30 taxpayers per annum have used the scheme, resulting in annual tax settlements of approximately £10,000,000.
Notable examples of pre-eminent works transferred include one of Sir John Vanbrugh's baroque masterpieces, Seaton Delaval, and much of its contents in 2009, John Constable's 'Stratford Mill', a Rubens illustration of the Roman goddess, Venus, in 2011 and recently a 2000 year old iron-age fire guard that was discovered in a peat bog in 1892.
After much campaigning by galleries and museums, HMRC and the Department for Culture, Media and Sport launched a joint consultation in June 2011 on proposals to encourage taxpayers to donate pre-eminent objects and works of art to the nation during their lifetime in return for a tax reduction. HMRC subsequently published draft legislation on 6 December 2011 for insertion in the Finance Bill 2012.
The proposed Cultural Gifts Scheme is designed to operate alongside the existing Acceptance in Lieu scheme and will share a £30,000,000 annual limit (previously £20,000,000 for the Acceptance in Lieu scheme alone). The scheme is open to individuals and corporate bodies but excludes trustees and personal representatives and will not apply to gifts of land or buildings. For individual taxpayers, a flat rate tax reduction of 30% of the donated object's fair market value will apply. The tax reduction can be spread across the year of donation and the subsequent four years in satisfaction of the individual's income and capital gains tax liabilities. However, the individual must agree the allocation of the tax reduction for each tax year in advance and once agreed it cannot be changed (thereby running the risk that any unused part of the reduction will be lost).
Corporate donors will benefit from a corporation tax deduction equivalent in value to 20% of the agreed value of the donated object but the reduction may only be applied in the accounting period in which the donation is made.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
