Mountain to be sold to pay Inheritance Tax bill
In what is probably a first, Blencathra, a 2850ft-high peak situated in the Lake District, is to be sold to contribute to the Inheritance Tax (IHT) bill in the estate of the 7th Earl of Lonsdale.
Lord Lonsdale died in 2006, leaving the title and estate to his eldest son, Hugh Lowther, but also leaving him a £9m IHT liability to deal with.
The estate has already disposed of a Turner painting (Dawn View of Lowther Castle) to the Tate Gallery for £2m and a farm for £1.6m to contribute to the IHT bill.
Where an estate owes IHT it must usually be paid within 6 months after the death or interest will be charged. In some cases you can pay by instalments once a year over 10 years. The 10 years allowed by HMRC is now 18 months from expiry and Lord Lonsdale’s estate still needs to raise a significant amount. This has prompted the offer of Blencathra (sometimes known as Saddleback due to its distinctive shape).
The 2677-acre parcel of land has little commercial value, as its grazing rights are owned by local farmers, it is open to free public access and cannot be commercially developed. However the offer price of £1.75m also includes grazing rights for 5471 ewes, 732 hogs, 200 lambs and the ancient feudal title of Lordship of the Manor of Threlkeld. The Lowther family bought this title in the seventeenth century before being granted the Lonsdale earldom, and a new acquirer will be able to apply to the College of Arms for their own personalised coat of arms.
Lord Lonsdale said “we don’t want to have to make inroads into the core of the estate and we don’t want to have to evict tenant farmers or other tenants from their houses so that we can sell them.”
This case highlights, on a grand scale, the need for careful estate and Inheritance Tax planning. There are many ways to reduce your IHT liability quite substantially and thereby protect your assets for your children. For the majority that will mean taking advantage of all available exemptions and reliefs and ensuring you have a tax-efficient Will in place. Trusts can also play a useful part in lifetime IHT planning and could save your beneficiaries having to sell a mountain to fund your IHT bill.
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