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HMRC internal manual

Inheritance Tax Manual

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HM Revenue & Customs
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Successions: Application of IHTA84/S120

Where the deceased/transferor has succeeded to the agricultural property (IHTM24030) on someone else’s death (note that IHTA84/S120 does not apply if the deceased/transferor has acquired the property by way of a lifetime transfer) then for the purposes of establishing whether the occupation (IHTM24070) and ownership (IHTM24100) conditions in IHTA84/S117 are satisfied

  • they are deemed to have owned it (and, if they subsequently occupy it, to have to occupied it) from the date of death, and
  • if that other person was their spouse or civil partner (IHTM11032), they are deemed to have owned the property and occupied it for the purposes of agriculture (IHTM24060) for any period during which the spouse or civil partner did so.

Thus the conditions of IHTA84/S117 may be satisfied when they would not otherwise be. But you must still keep those conditions, especially the two and seven year periods - or the alternative periods where replacement property (IHTM24110) is concerned - in view. If the first person to die was not the deceased’s/transferor’s spouse or civil partner, IHTA84/S120 (1) is of no help is satisfying

  • the occupation test if the earlier death is within the two period in IHTA84/S117 (a), or
  • the ownership test if the earlier death is within the seven period in IHTA84/S117 (b).

Example 1

Adrian buys a farm in 1986, which he runs as an owner farmer. Adrian dies in 2004. By Will the farm is left to his daughter, Sandra, who takes over and continues the farming business. Sandra dies in 2005.

IHTA84/S120 (1) is no help in providing relief on Sandra’s death because

  • Sandra died within two years of Adrian’s death, and
  • Sandra was not Adrian’s spouse or civil partner.

However relief may be available for successive transfers, IHTA84/S121. See IHTM24130.

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Example 2

If the facts in Example 1 are changed so that Sandra is now Adrian’s spouse, IHTA84/S120 (1) provides relief because

  • Sandra either occupied or is deemed to have occupied the property for agricultural purposes from the date Adrian died,
  • under IHTA84/S120 (1)(b) Sandra is deemed to have occupied the property for agricultural purposes during the period Adrian occupied it for agricultural purposes from 1986 to his death in 2004.

Those two periods combine to enable Sandra to satisfy the two year occupation test in IHTA84/S117 (a).