Being King of the Castle Not Always A Bed Of Roses
Increased pressures of financial burdens and regulatory demands are forcing the keepers of our natural heritage to look to sell treasured Scottish properties and assets, according to leading chartered accountants Chiene + Tait.
While Scotland's turbulent history has left an enduring mark in shape of the many castles, fortresses and tower houses peppered across the nation, modern day issues such as HM Revenue and Customs guidelines and soaring running costs are causing many owners to put their estates on the market – despite them, in many cases, having been in the family for generations.
Scottish farm and estate sales have been buoyant this year despite widespread economic uncertainty, according to estate agents Strutt & Parker, which said more than £80m had been spent on the market in 2011. The figures indicated 22 estates were sold in Scotland - five more than in 2010.
Helen Mackenzie, Tax Partner at Chiene + Tait, which has 125 years of experience in offering advice to heritage keepers, said that while owning a piece of Scottish heritage such as a historic castle can seem very attractive, the costs of running and maintaining such assets can be a poisoned chalice.
She said: “Whoever buys or inherits a prestigious property becomes the guardian of an important slice of Scottish history, often with ownership tracing back centuries.
“Much of Scottish national heritage remains in private ownership. This unique position can present a heavy burden for an owner in terms of maintaining the property and also in trying to ensure it prospers in business terms. Assessing the best way to develop the business potential of a heritage property whilst also preserving a family home, can be a tricky balance.
“Often, for those who manage our national heritage, they find that simple things others take for granted in running a home such as heating, lighting, insurance can be excessively expensive particularly when the assets themselves, may not generate any or sufficient income.
“While there are certain tax breaks available for the owners of heritage assets including conditional exemption for inheritance tax and inheritance tax favoured heritage maintenance funds, tax breaks do come with strings attached.
“In return for encouraging owners to retain and care for our heritage, HM Revenue and Customs will allow certain tax exemptions, but only if conditions imposed by HMRC, such as public access, are met by owners.”
Helen believes this type of pressure is contributing to the trend of castles and other heritage sites being put up for sale.
She said: “We have seen cases where the conditions imposed by HMRC have resulted in owners feeling that their properties no longer feel like their home. That, coupled with increasingly expensive running costs, can turn thoughts to selling assets that may have been in the family ownership for generations.
But Helen points out that even when a decision is taken to sell up, the tax burdens do not stop.
She added: “They can be particularly complex as it may involve not only capital gains on the gain on sale, but also the clawback of inheritance tax and estate duty which was previously exempt on the death of previous owners , perhaps going back many generations.
“Whether people are in the fortunate position of adding a castle to their portfolio or wanting to relieve themselves of the burden of a heritage asset, it is absolutely essential that advice is received from a trusted team.”
More information about the company can be found at http://www.chiene.co.uk/ and Tax Partner Helen Mackenzie can be contacted on helen.mackenzie@chiene.co.uk
ENDS
Note to Editors
Chiene + Tait Chartered Accountants, based at Dublin Street Edinburgh and in 2010 celebrated its 125th anniversary. In addition to accounting, the firm offers advice in the fields of assurance, VAT, employment, personal and corporate taxation, management accounts, risk advisory, corporate finance, specialist sector advice and Tax, IT and HR consultancies.
Issued on behalf of Chiene + Tait by www.holyroodpr.co.uk. Further information on 0131 561 2244 or info@holyroodpr.co.uk