Chapter IHTM24145

Published date20 March 2016
Record NumberIHTM24145
CourtHM Revenue & Customs
IssuerHM Revenue & Customs

You should seek advice as appropriate where transitional relief is claimed, or where you think it may be due.

Under the general scheme for agricultural relief, agricultural property (IHTM24030) let before 1 September 1995 is eligible for relief at the lower rate (IHTM24140). However where the deceased/transferor had been beneficially entitled (IHTM04031) to the interest transferred since before 10 March 1981 relief is available at the higher (vacant possession) rate on the first transfer of that interest after that date, provided the conditions, see below, of IHTA84/S116 (3) are met.

The reason for these provisions is that before 10 March 1981, the tenure of the land had not been relevant in establishing whether or not the former agricultural relief applied. Consequently, many farmers had arranged their affairs to suit the circumstances of that relief. So that these farmers would not be disadvantaged by what is now the current relief, the transitional provisions ensure that the higher rate of relief continues to apply where appropriate.

Conditions for the application of the transitional provisions

The transitional provisions under IHTA84/S116 (3) may apply where agricultural property is subject to a tenancy which is either

  • an asset of a partnership of which the deceased or transferor was a member or
  • held by a member of the deceased’s or transferor’s family in succession to the deceased or transferor, or
  • held by an unquoted company in which control was held throughout the period from 10 March 1981 to date of death/transfer by the deceased/transferor (and, if appropriate, their spouse).

and the conditions for the former agricultural relief under FA75/SCH8 would have been satisfied if the deceased/transferor had disposed of his interest by a transfer of value immediately before 10 March 1981.

The conditions imposed are that

  • had the let land been transferred immediately before 10 March 1981 it would have qualified for the former agricultural relief under FA75/SCH8, and
  • the owner had not, and could not have had, the right to vacant possession at any time between 10 March 1981 and the date of death/transfer. For the purposes of this transitional relief, the value and acreage limits of £250,000 and 1,000 acres (or 404.7 hectares) contained in the former agricultural relief are re-imposed, but with provision under IHTA84/S116 (4) that any excess qualifies for...

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