IHTM24152 - Value and Valuation:
Treatment of mortgages and debts
The general rule for the deduction of mortgages and other debts
is that
- debts charged on any property should be
deducted primarily against the value of the property on which they
are charged, and
- debts not charged on any property should
be deducted primarily against personal property not qualifying for
agricultural relief.
Accordingly, to calculate the value for relief it is normally
sufficient for you to
- deduct debts charged on the agricultural
property from the value of the property and then
- calculate the relief by reference to the
net value.
Exceptionally you may have to deduct other liabilities from the
value of the agricultural property if
- the personal estate is not sufficient to
meet the liabilities not charged on any property, or
- debts charged on non-agricultural property
exceed the value of the property on which they are charged.
You should apportion any liability that is charged on
- property which is partly agricultural and
partly non-agricultural, or
- agricultural property which has both
agricultural and non-agricultural value.
In making this apportionment, treat growing crops, cultivations
and unexhausted manures as part of the agricultural value of the
agricultural property, even if they have been separately accounted
for as personal estate (unless the amount involved is small).
Example
T's estate includes land and buildings with a total value of
£1m. Of that £1m, £800,000 is the value of
agricultural property which has an agricultural value of only
£100,000 (the remaining £700,000 is development value). A
mortgage of £600,000 is charged on the whole of the £1m
land and buildings.
For the agricultural relief calculation, you should deduct
from the agricultural value the proportion of the mortgage
attributable to that value. The apportionment is
| £100,000
(agricultural value) x |
600,000
|
= £60,000
|
| 1,000,000 | |
|
So the value on which the relief is calculated is |
| agricultural
value |
£100,000 | |
| less
proportion of mortgage |
£60,000 | |
| net value for
relief |
£40,000 | |
(This text has been withheld because of exemptions in the
Freedom of Information Act 2000)
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(This text has been withheld because of exemptions in the
Freedom of Information Act 2000)
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(This text has been withheld because of exemptions in the
Freedom of Information Act 2000)
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(This text has been withheld because of exemptions in the
Freedom of Information Act 2000)
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(This text has been withheld because of exemptions in the
Freedom of Information Act 2000)
(This text has been withheld because of exemptions in the
Freedom of Information Act 2000)
(This text has been withheld because of exemptions in the
Freedom of Information Act 2000)
