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HMRC internal manual

Inheritance Tax Manual

HM Revenue & Customs
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Agricultural property: Contracts and trusts for sale

Where agricultural property (IHTM24030) is transferred at a time when it is subject to a binding contract for sale, agricultural relief is not due unless the sale is to a company and is made wholly or mainly in consideration of shares or securities which will give the vendor control of that company, IHTA84/S124 (1).

Where the property transferred is a shareholding that is subject to a binding contract for sale, relief is not due unless the sale is made for the purposes of reconstruction or amalgamation, IHTA84/S124 (2).

But, where a transferor enters into a binding contract for sale of agricultural property for less than full consideration and that transaction itself gives rise to a claim for tax, that claim may qualify for relief. Subject to other statutory conditions being satisfied, relief is available on the net value transferred. This normally the open market value of the agricultural property less the price paid.

Where a lifetime transfer (other than a PET (IHTM04057)) is made shortly before a sale, you should investigate the circumstances of the transfer (IHTM14832) to ensure the relief is properly due.

The fact that the property is subject to an unexercised trust for sale, does not prevent it qualifying for relief.