IHTM25553 - AR/BR 100% relief allowance: settlements - transitional period - temporary relaxation of ownership and occupation conditions

There are two transitional rules that apply to relievable property which enters and exits a settlement during the transitional period. 

The rules apply if 

  1. property becomes comprised in a settlement on or after 30 October 2024 and  

  2. some or all of the value transferred by that transfer was reduced by 100% (under IHTA84/S104 or IHTA84/S116) and  

  3. some or all of that property is then subject to a proportionate charge under IHTA84/S65 before 6 April 2026. 

The first transitional rule 

Without the rule, and because the transitional period is shorter than 2 years, the trustees could not have satisfied the relevant occupation and ownership conditions for agricultural or business relief to apply.  

So, the first rule is that the occupation and ownership conditions are treated as satisfied, which means that relief will not be denied on those grounds (FA26/Sch12/Para 15(2)). 

The second transitional rule 

In addition, a gift into a settlement during the transitional period would normally mean that the trustees would acquire an allowance (IHTM25552). But as the property is no longer in the settlement the trustees may not need that allowance. And it may also reduce the potential for future settlements by the settlor to acquire an allowance.  

So, the second rule is that the gift at (i) above is not taken into account in establishing acquired allowances (FA26/Sch12/Para 15(3)). 

But if the settlor dies within 7 years of the gift 

As the trustees no longer own the property, it follows that the tests at IHTA/S113A (IHTM24172) and IHTA84/S124A (IHTM25361) cannot be met at death and tax will be charged on the unrelieved value.