In the village where I live, we are wedged between two huge estates, the Duke of Wellington owns most of the land to the North and Earl Calthorpe a lot to the South. Outside of the village there are two small estates owned by two wealthy non-domiciles and a private airport where tax exiles can fly in and out in small aircraft.
When I originally sat my tax exams (no need to go into grubby detail about how long ago), we were taught about various niche Inheritance Tax (IHT) reliefs that had been introduced over the years with pressure from the landed gentry. One was donations to political parties (which always raised a wry smile) and the other was Conditional Exemption Tax Incentive Scheme (CETIS). CETIS was, we were told designed to keep Nationally significant items such as art in the country and available for the public to see. Beautiful country house could also qualify and CETIS reduced Capital Gains Tax as well as IHT.
It now seems that CETIS is being used by wealth landowners to avoid tax on some of the most deliberately nature deprived land that they own. To be clear, I am not accusing either my local Duke or Earl of doing this, on the contrary I have met the Earl, and he was lovely. However, campaigners did manage to get HMRC to disclose before last year’s budget that 355 landowners are using the scheme to the tune of £68m.
Some of this relief applies to grouse moorland which if you want to understand the scale of the damage these sites are doing to our national biodiversity, I would recommend reading Guy Shrubsole’s excellent book The Lie of the Land. It seems extraordinary that as taxpayers we are funding this type of environmental destruction by families who have enough money already.
What is galling about this, is that we already know that the highest percentage IHT rate paid is by those estates between £3million and £7.5million. Those below £3million don’t tend to have enough to pay a large percentage of their estate in IHT. Those above £7.5million pay expensive lawyers and accountants to avoid inheritance tax.
CETIS is one of the reliefs that these large estates use to avoid inheritance tax. Given the hoops that most clients are made to jump through with their tax affairs and the size of the UK deficit, surely time has come for a proper review of these reliefs and what has become an overly complex system.
If you want to speak to us about planning for inheritance tax on your own estate, please do get in touch with our office in Hook, Hampshire. We advise clients throughout the UK and internationally on their tax, planning and investment strategies.