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HMRC internal manual

Inheritance Tax Manual

Unlisted shares: Replacements

The occupation (IHTM24070) and ownership (IHTM24100) tests) in relation to the property are satisfied under IHTA84/S123 (2) if the company

  • occupied the original and the replacement property for the purposes of agriculture for a total of two out of the five years ending with the transfer, or
  • owned them for seven out of the ten years ending with the transfer and during that time they were occupied by the company or another for the purposes of agriculture.

IHTA84/S123 (3) provides that the period of ownership of the shares required by IHTA84/S123 (1)(b) is determined by adding the period of their ownership to that of the property they replaced in the situation where the transferred shareholding replaced other eligible property (such as a farm or other shares in a farming company).

IHTA84/S123 (4) provides that the relievable value is to be restricted to the lowest value as at the date of death or transfer of the property owned or occupied or shares owned during the replacement period. The exception is where the replacement concerned resulted from the formation, alteration or dissolution of a partnership.