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HMRC internal manual

Shares and Assets Valuation Manual

IHT Agricultural Property Relief: Additional Conditions - Replacement Provisions

Replacement shares - S.124A(6)(a) IHTA 1984

The additional conditions are relaxed if the shares owned by the transferee immediately before the death of the transferor (or the death of the transferee, if earlier):

  • were received by the transferee as a result of a reorganisation of share capital or a take-over bid and
  • would under any of the provisions of ss.126-136 TCGA 1992, be identified with the shares (or part of them) received by the transferee under the transfer.

When s.124A(6)(a) applies the transferee is treated as owning the original shares throughout.

Other Replacement Property

Where shares owned by the transferee immediately before the death were issued as consideration for agricultural property to which s.116 applied in relation to the chargeable transfer, the transferee’s ownership of the agricultural property is treated as including his period of ownership of the shares. The IHT caseworker may ask Shares and Assets Valuation whether the shares come within the subsection.

The main replacement provisions for agricultural land are discussed in the Inheritance Tax manual at IHTM24110 onwards.

S.124B Not applicable

These provisions do NOT apply where the original shares or securities are subsequently replaced. It is implicit in the references to ownership and occupation for agricultural purposes in s.124B(3)(b) or (c) that the original property and any property replacing it have to be agricultural property as such. The replacement property has to be agricultural property immediately before the death - (s.124B(3)(d)).

  Additional Guidance: SVM150000