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HMRC internal manual

Shares and Assets Valuation Manual

IHT Agricultural Property Relief: Relief on lifetime transfers: (additional) tax payable on transferor’s death within seven years - additional conditions

Ss.124A and 124B IHTA 1984 contain additional conditions for certain lifetime transfers made on or after 18 March 1986 and within seven years of the death of the transferor.

Relief on lifetime transfers

The transfers concerned are

  • s.124A(1) PETs chargeable and
  • s.124A(2) transfers chargeable when made where additional tax may be payable

as a result of the death.

Relief on lifetime transfers: s.124A(3)(a) and (c)

AR is available in respect of the charge/tax arising on death if

the shares or securities were

  • eligible for AR at the time the transfer was made and
  • (s.124A(3)(a)) owned by the transferee throughout the period from the date of the chargeable transfer to the transferor’s death (or the transferee’s death, if earlier) and
  • not subject to a binding contract for sale at the time of the death (unless relief is preserved by s.124A(6)(a) - see SVM112160)

s.124A(3)(c) - Additional conditions

There are also additional conditions relating to the agricultural property.

Throughout the period from the date of the chargeable transfer to the date of the transferor’s death (or the transferee’s death if earlier) the agricultural property must have been

  • owned by the company and
  • occupied (by the company or another) for the purposes of agriculture.

The Transferee

“The transferee” is defined (by s.124A(8) for the purpose of s.124 as a whole), as the person who became the owner of the property on the transfer or the trustees of the settlement where on the transfer the property became (or remained) settled on discretionary trusts. Except for discretionary trusts or other trusts subject to ten-yearly and exit charges, ownership means ‘beneficial ownership”, so a life tenant can be a transferee for this purpose.

  Additional Guidance: SVM150000