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HMRC internal manual

Inheritance Tax Manual

Occupation: The occupation condition

To satisfy the first alternative condition in IHTA84/S117, throughout the two years immediately before the transfer the deceased or transferor must have occupied the property for the purposes of agriculture (IHTM24060).

You will need to establish who is in occupation for agricultural purposes. You will need to examine certain scenarios, such as grazing arrangements, very carefully. The owner of land let on a grazing licence to a farmer may not be in ‘occupation for the purposes of agriculture’, even though the owner may be in legal occupation. Just as, for rating purposes, the owner of an empty house, who is in legal occupation, is not in rateable occupation (‘Westminster City Council v Southern Rly Co [1936] AC 511’ - Lord Russell), Each case must be determined by its own facts as supported by appropriate evidence.

This general rule is relaxed:

  • where the property transferred replaced other relievable property, IHTA84/S118 (IHTM24111)
  • where the deceased/transferor became entitled to the property on another person’s death, IHTA84/S120 (IHTM24121)
  • where the property transferred had been acquired on an earlier transfer within the relevant period, IHTA84/S121 (IHTM24131).