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HMRC internal manual

Inheritance Tax Manual

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HM Revenue & Customs
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Successions: The occupation requirement

The relationship between IHTA84/S120 (1)(a) and IHTA84/S117 (a) is not precisely defined in the legislation. IHTA84/S117 (a) requires the deceased/transferor to have occupied (IHTM24070) the property for the purposes of agriculture (IHTM24060) for the two year period and IHTA84/S120 (1)(a) applies where the deceased/transferor succeeds to property on someone else’s death and later occupies it. The deceased/transferor is deemed to have occupied it from the date of that death.

However IHTA84/S120 (1)(a) does not expressly say whether the occupation referred to, whether actual or deemed, is or is not occupation for the purposes of agriculture as required by IHTA84/S117 (a).

In practice, you should apply IHTA84/S120 (1)(a) as if it deems occupation for the purposes of agriculture from the date of the earlier death provided

  • the deceased/transferor subsequently occupies the property for agricultural purposes, and
  • the property was not at any time between the earlier date and later transfer occupied for non-agricultural purposes.

If either of these conditions is not satisfied and the taxpayer claims that IHTA84/S120 (1) (a) applies because of the deceased’s/transferor’s ‘subsequent occupation’ of the property, you should

  • check to see if relief is available as successive transfers (IHTM24130), and
  • if it is, allow relief expressly by reference to IHTA84/S121, not IHTA84/S120, but

seek advice if IHTA84/S121 does not allow relief.