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HMRC internal manual

Inheritance Tax Manual

From
HM Revenue & Customs
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Grant of an agricultural tenancy

IHTA84/S16 applies to the grant of a tenancy of agricultural property. (IHTM24000) The grant is not a transfer of value (IHTM04024) if three conditions are satisfied. The conditions are the

  • tenancy is for agricultural purposes (IHTM24060)
  • tenancy is granted for full consideration in money or money’s worth, and
  • property is in the United Kingdom, Channel Islands or the Isle of Man.The grant of an agricultural tenancy is rarely reported to this office. If your investigations suggest that a tenancy may have been granted, you should

  • find out when, how and in whose favour the grant was made, and
  • on receipt of the information, refer the case to TG.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Settled propertyUnder IHTA84/S52 (3), IHTA84/S16 can be relevant in considering transactions between trustees and beneficiaries which reduce the value of settled property. (

IHTM04086)

ExampleSettled property is held on trust for A for life, but subject to powers of advancement to the members of a class of remaindermen. The trustees purchase agricultural property with vacant possession and then grant an agricultural tenancy to a member of the class. So it is a transaction within IHTA84/S52 (3) which, subject to the subsection’s proviso, potentially gives rise to a IHTA84/S52 (1) charge. The effect of the proviso is to import IHTA84/S16 to prevent that potential charge if the tenancy is granted for full consideration.

The provisions of IHTA84/S16 may also apply to charges arising on any of the special trusts (IHTM04098) through IHTA84/S70 (4).