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HMRC internal manual

Shares and Assets Valuation Manual

IHT Agricultural Property Relief: Introduction

Main Requirements

The legislation governing Agricultural Relief (AR) is contained in ss.115 to 124B (inclusive) IHTA 1984. AR is due to the extent that the value transferred by a transfer of value is attributable to the agricultural value of agricultural property.

The relief is extended to shares or securities of a company if the following conditions are satisfied;

  • The shares or securities gave the transferor control of the company immediately before the transfer (see SVM112040).
  • The agricultural property formed part of the company’s assets and part of the value of the shares or securities can be attributed to the agricultural value of that property (see SVM112050).
  • The company satisfied the occupation/ownership tests in relation to the agricultural property (see SVM112060 onwards).
  • The transferor satisfied the ownership requirement in relation to the shares or securities (see SVM112100).
  • The shares or securities were not subject to a binding contract for sale at the time of the transfer (see SVM112120).

All these conditions have to be satisfied.

Lifetime Transfers

There are additional conditions which have to be satisfied for the purposes of calculating

  • the value transferred by a potentially exempt transfer (PET) that becomes chargeable.
  • for all other chargeable transfers after 17 March 1986, the additional tax payable because of the transferor’s death within seven years of the transfer.

Details of the conditions appear at SVM112140.

Relevant property trusts

S.115(1) - In the case of non-interest in possession (discretionary) settlements and, on or after 22 March 2006, all settlements which are subject to ten yearly and exit charges, references in the agricultural relief provisions to the “transferor” should be taken as references to the trustees of the settlement and references to “the transfer” as references to the occasion of charge.

  Additional Guidance: SVM150000