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Chapter IHTM24151

Document Cited authorities 1 Cited in Related
Vincent
Published date20 March 2016
Record NumberIHTM24151
CourtHM Revenue & Customs

It is possible that the conditions for both business relief and agricultural relief may be satisfied in respect of the same property. To prevent double relief, IHTA84/S114 (1) provides that any part of the value transferred which is reduced by agricultural relief (at whatever rate), or would be so reduced but for IHTA84/S121 (3), cannot be reduced by business relief. (IHTM24133)

As business relief and agricultural relief do not have to be claimed by the taxpayer, the effect of IHTA84/S114 (1) is that it is not possible for the taxpayer to choose between them.

IHTA84/S114 (1) operates by preventing the same part of the value transferred being reduced by both business relief and agricultural relief, giving priority to agricultural relief. However, business relief may be due on value which is not subject to agricultural relief if it is attributable to property that under IHTA84/S105 (1) qualifies as relevant business property (IHTM25141).

The open market value of agricultural property may exceed its agricultural value (IHTM24150), for example, because the land has planning permission, there is development or amenity value, or mineral value (such as gravel or sand). A difference between the open market values and the agricultural values often occurs on farms where there are ranges of traditional buildings suitable for conversion into residential or commercial use; in many areas these can have significant excess value. Agricultural relief will not be available in respect of the excess value. However, business relief may be available in the alternative. Care should be taken to confirm that the parts of the farm with excess value for non-agricultural use are actually used as an asset of a qualifying business if business relief is claimed. Problems frequently arise with traditional buildings suitable for development that are obsolete for modern farming methods and have not been used for the business for some considerable time.

If the deceased/transferor is involved in farming as a sole trader then business relief will be available at 100% on the agricultural property which also constitutes relevant business property, IHTA84/S105 (1)(a). This will...

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