Farthing Corner — IHT Advisor Fact File

Prepared by: Ed Dowding Date: March 2026 Purpose: Factual briefing for IHT / estate planning advisor. All material facts presented; strategy to be determined by advisor.

1. Family

Family dynamics:

• Ed and Kirsty are not married. They are likely to separate once the children are more stable and Kirsty is independently set up. Two young children (2y4m and 10 weeks). Kirsty has repeatedly offered to sign any documents needed to protect assets from claims by her. Their relationship is at times challenging, but broadly reconciled with needing to keep stability for the next few years.
• Liz is supportive of transferring assets to Ed. Asset protection from any future claims by Kirsty is an important consideration — both for Liz and for Sarah.
• Sarah has already received a major asset (Swiss chalet — see below). Sarah is hostile to Kirsty and has a history of contentious litigation (contested probate, 4-year divorce) which tends to only marginally benefit her position but at catastrophic cost to relationships and time. She is pushing for a three-way meeting with an advisor - something I agree with, but also we’ve tried this before without any movement from Liz.
• Sarah repeatedly pushes Liz to move out of the property, which Liz resists.
• Liz is very reluctant to leave Farthing Corner. Any strategy that requires her to move out entirely will face strong resistance. She may come to it on her own terms, but external pressure (particularly from Sarah) is counterproductive.
• Ed has Lasting Power of Attorney (health + finance) for Liz, jointly with Sarah.

2. Liz’s Estate

2a. Farthing Corner (Main Property)

Property composition:

Liz’s private areas within main house:

• One bedroom, one study, kitchen, utility room
• No clean physical separation between private and B&B areas — shared kitchen, bathrooms

Heating: Wood from onsite woodland + oil

Condition: The property is deteriorating. At 3.51 acres with a thatched main house, woodland, and garden, it requires significant ongoing maintenance that is beyond what Liz can manage at 79. The deterioration is visibly showing. The property risks losing value without investment and active care.

2b. Swiss Rental Property (Chalet)

This PET has consumed the entire Nil Rate Band. Any subsequent PET receives no NRB shelter. If Liz dies within 7 years of this gift, Sarah faces IHT on the chargeable amount above the NRB.

2c. Other Assets

2d. Income

Liz has no independent income or savings beyond the B&B and state pension. The B&B has been her primary income source for 10+ years.

2e. IHT Estimate (Do Nothing)

If Swiss PET succeeds (Liz survives to Oct 2031):

3. Will and Powers

4. Ed’s Financial Position

4a. Income

4b. Assets (as at March 2026)

4c. Liabilities

• No mortgage
• No significant debts known

4d. Mortgage Capacity

• Estimated ~£300,000–400,000 based on £120k consulting income
• Owns one property (France, ~€80k) — not a first-time buyer in the UK sense

4e. Other Relevant Facts

• Ed is not married to Kirsty. Cohabitation agreement being drafted.
• Ed owns a flat in La Plagne, France (~€80k, no mortgage).
• Ed has interest in purchasing a larger property in France (separate from FC).

5. B&B Trading History

Accounts from APKM Accountancy (Anna Mattocks):

Normal Trading Period

Disrupted Period (Water Contamination)

Context: Water contamination from July 2024, insurance claim Oct 2024–Dec 2025. B&B effectively non-operational for 18 months. Active Aviva complaint (counter-proposal for £23,000 sent Feb 2026, awaiting response).

2022 and 2023 figures not included in the data provided by the accountant — to be confirmed.

B&B Operational Details

BPR Considerations (for advisor)

The B&B has historically provided active hospitality services (breakfast, housekeeping, guest management, fire/log maintenance, garden produce). The question of whether this qualifies as a “trading business” for BPR purposes — particularly post-FHL abolition (April 2025) — is a key question for the advisor.

Relevant factors:

• The property is mixed-use (B&B + private residence) with no clean physical separation
• Liz is the sole operator with no employees
• Liz is currently ramping the B&B back up after ~18 months of downtime due to water contamination
• From April 2026: BPR 100% relief capped at first £2.5M per individual, 50% above (FC is within cap)

6. Sarah’s Position

Sarah initiated the Swiss chalet PET (Oct 2024) without full consideration of the NRB implications — the PET consumed the entire Nil Rate Band, significantly increasing IHT exposure on any subsequent FC transfer to Ed. Sarah has a history of contentious litigation and is hostile to Kirsty.

7. Key Complications / Factors for Advisor

7a. The Swiss PET consuming the NRB

The Oct 2024 PET of the Swiss chalet to Sarah has consumed the entire £325,000 Nil Rate Band. Any second PET (e.g. FC to Ed) stacks on top. If Liz dies within 7 years of both PETs, the combined chargeable value could be ~£1.87m with no NRB shelter for the second gift. This is the single biggest complication.

7b. Gift with Reservation risk

If Liz gifts FC to Ed but continues living there, GWR rules apply unless:

• She pays full market rent, OR
• She moves out entirely, OR
• The property is partitioned and she only occupies her retained portion

The property has no clean separation — shared kitchen, bathrooms. There is an existing garden cabin (deteriorating) that could potentially be replaced as a self-contained unit for Liz.

7c. Will is unknown

Liz has a will but will not disclose its contents. This means we cannot confirm whether FC is left to Ed, to Sarah, split, or subject to other conditions. The advisor should assume we are planning without knowledge of the will.

7d. Liz’s health and the 7-year clock

Liz has metastatic breast cancer. Treatment is working (all sites shrinking), but the diagnosis creates urgency around any PET strategy. The 7-year clock needs to start as soon as possible if a PET route is chosen.

7e. Ed and Kirsty — likely future separation

Ed and Kirsty are not married and have no cohabitation agreement. They have two young children. Separation is likely once the children are more stable and Kirsty is independently set up. Kirsty is a lawyer and has offered to sign any documents needed to protect assets. Any assets transferred to Ed still need robust legal protection. Liz and Sarah are both concerned about this risk.

7f. Care fee risk

If Liz transfers FC while healthy, with genuine business succession reasons, there is a question about deliberate deprivation of assets for local authority care fee assessment. Liz’s cancer history may complicate the “no foreseeable care need” argument.

7g. B&B trading status

The B&B was non-operational for ~18 months (2024–2025) due to water contamination. Liz is currently ramping it back up. If BPR depends on active trading, the gap in operations and the strength of the restart may be relevant.

7h. Conservation Area

The main house is within West Tytherley Conservation Area. It has not been confirmed whether all 3.51 acres fall within the boundary. Any new builds or significant structural changes within the conservation area require planning permission with additional scrutiny.

7i. Heritage property potential

The 1991 Conservation Area Policy describes the property as having a timber-framed core “which probably dates back to the 15th century.” It is not currently listed. There may be potential for a heritage property IHT exemption (IHTA 1984, ss.30-35) — which would not require a 7-year survival period. This has not been formally assessed, and the heritage claim rests on a policy document description, not a formal survey.

7j. Mortgage against gifted property

Ed may wish to mortgage FC after receiving it as a gift, to release capital for a cabin build and/or property purchase elsewhere. Lender restrictions on recently-gifted properties and the interaction between mortgage debt and IHT (FA 2013 debt deduction rules) need consideration.

7k. France / EU residency ambition

Ed has a longer-term goal of purchasing property in France and potentially securing EU residency. This may interact with IHT planning (non-UK domicile questions, cross-border tax, use of mortgage capital).

8. Potential Routes (Not Recommendations)

The following approaches have been identified through research. Each has merits and risks. We present them for the advisor’s assessment.

9. Documents Available

10. What We Need From the Advisor

1. Assessment of which routes are viable given these facts
2. Identification of fatal flaws or HMRC attack points in any approach
3. View on BPR strength for this specific B&B (post-FHL abolition)
4. Advice on timing — given Liz’s health, how urgently should any transfer happen?
5. Whether the heritage exemption route warrants investigation
6. Impact of the Swiss PET on any FC transfer strategy
7. How to protect transferred assets from claims by Ed’s partner
8. Care fee exposure assessment
9. Whether you can handle all aspects or whether separate specialists are needed
10. Estimated costs for recommended approach

All figures are as of March 2026 unless otherwise stated. Accounts data sourced from APKM Accountancy and PocketSmith.