Ross McConnell - Kinross Based Chartered Accountant

Toasting The Taxman

by ROSS MCCONNELL on MARCH 11, 2019

No Inheritance Tax On UK Vineyards Says HMRC

How’s this for a sobering statistic: annual commercial wine production in Great Britain is predicted to total 40 million bottles by 2040. 

In 2017 alone, according to WineGB, one million new vines were planted in the UK and more than 6,300 acres were planted with vines that year alone.

So the news that HMRC has updated its definition of what constitutes agricultural use of land in relation to inheritance tax guidelines now means that owners of vineyards in the UK – and cider apple orchards for that matter – can pass on land utilised for the production of fruit that is then made into wine or cider without incurring inheritance tax. 

It is news that will have been the cause for many a cork to have been popped in rural homes the length and breadth of the country.
Now, vineyards and orchards qualify for agricultural property relief, and as a consequence the value of such land will be up to 100% tax-free when left as part of an estate. 

That is resulting in the land itself increasing in value. Estate agents Strutt & Parker have become the first in the UK to market a substantial parcel of land purely on its grape growing ability and the chairman of WineGB, speaking to the Times, said that he had seen vine land now trade at more than £20,000 per acre. 

That is a premium of up to 75% on other types of agricultural land. 

But it’s not just good news for the landowners. By 2040, WineGB also expect wine tourism to generate £658 million of additional revenue each year, resulting in an increase in jobs in viniculture, from 2,000 at the present time, to 24,000 by 2040.

With this increase in production and cultivation, there is even a concern in the existing industry as to how the wine will get produced.

There’s another opportunity here then: with more acres given over to viniculture, and a lack of wineries, is anyone is thinking of diversification? Need help creating a business plan? 

When it comes to cider, there is a growing retail market here too, as all real cider is suitable for a vegan and wheat free diet, according to real-cider.co.uk. And growing apples (or pears – producing Perry) is possible across more of a widespread area of the UK, compared to commercial scale vineyards. 

More than half (56%) of apples grown commercially in the UK are now used in cider making and the volume of cider produced annually is in excess of 6 million hectolitres or 130 million UK gallons. UK cider exports are actually worth more than £100m annually.

With hundreds of different cider apple varieties, there is an almost limitless potential to produce drinks of different styles. So plenty for many a rural businessowner to mull over, as they sip a glass or two of their favourite vintage this weekend. 

Let’s all raise a glass to new opportunities!

To check whether assets in an estate qualify for Agricultural Relief, and the rate at which it is due, you can go to https://www.gov.uk/guidance/agricultural-relief-on-inheritance-tax or contact us for more information and support with tax planning.

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