British owners of farmhouses overseas may now be able to claim UK inheritance-tax relief, say accountants.

The government had to extend UK inheritance-tax relief to agricultural property and woodlands in Europe after a European Court of Justice ruling that it was unlawful to limit it to the UK. Relief is available on any inheritance tax paid on or after April 23, 2003, so thousands could claim refunds.

Angela Beech of Blick Rothenberg said: “Britons who own, say, a farmhouse in France or a farm cottage in Italy, could benefit hugely.”

Tax breaks on furnished holiday lets were also extended to property in Europe after a European Commission ruling.

The owners of furnished holiday accommodation in the UK are treated for tax purposes as if they are trading, meaning they can offset losses against gains and roll over capital gains.

This relief will be extended to European properties — but for one year only.

Tax breaks for furnished holiday lets — both in the UK and Europe — will be abolished completely from 2011.