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Chapter IHTM24243

Document Cited authorities 1 Cited in Related
Vincent
Published date20 March 2016
Record NumberIHTM24243
CourtHM Revenue & Customs
IssuerHM Revenue & Customs
Land let on new tenancies

IHTA84/S116 (2)(c) (inserted by FA95/S155) states that 100% relief will apply if

‘the interest of the transferor in the property does not carry either of the rights mentioned in paragraph (a)’ (that is the right to vacant possession or the right to obtain it within 12 months) ’above because the property is let on a tenancy beginning on or after 1 September 1995.’

So, this section will apply in respect of all new tenancies of agricultural land commencing on or after 1 September 1995, not just farm business tenancies under the ATA 1995. For further guidance on this point, and an example, see IHTM24241. A succession tenancy granted under the statutory succession scheme in the 1986 Act will be a ‘new’ tenancy for this purpose if it commences on or after 1 September 1995.

For the purposes of inheritance tax the commencement of the new tenancy is taken to be the date of death of the tenant who is succeeded, IHTA84/S116 (5B).

Surrender of AHA 1986 tenancy

A tenancy under the 1986 Act may be terminated and a farm business tenancy granted in its place in order to take advantage of the new provisions, particularly in family situations. So long as there has been a clear surrender of the old tenancy (or the necessary notice and counter-notice has taken place to formally determine the old tenancy) there should not be a problem.

In a family situation where the deceased/transferor is the tenant (either sole or as a member of a partnership which occupies the land where he may also be the landlord) a surrender for no consideration may constitute a transfer of value. If the tenancy was at a full rack rent or there is provision for regular rent reviews then it is unlikely that a surrender will constitute a transfer of value. However, if the surrender does constitute a transfer of value and the donor/tenant dies within the seven-year period then...

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