IHTM24001 - Introduction: introduction to agricultural relief

Essentially, agricultural relief is available on the:-

Section 116(1) of the IHTA84 states that ‘agricultural relief is due to the extent that the value transferred by a transfer of value (IHTM04024) is attributable to the agricultural value (IHTM24150) of agricultural property �(IHTM24030). In this case, transfer of value has its extended meaning under IHTA84/S3 (4), so the relief is available on deemed transfers of value (IHTM04025).

»Ê¹ÚÌåÓýapp relief is also available on discretionary trusts under IHTA84/S115 (1), under which a transfer of value includes an occasion on which tax is chargeable on discretionary trusts (IHTM04096) and references to the value transferred by a transfer of valueâ€� and ‘the transferorâ€� will include, respectively:

  • the amount on which tax is then chargeable
  • the trustees of the settlement concerned.

»Ê¹ÚÌåÓýapp relief is not available on other occasions of charge, such as when conditionally exempt property is subject to a recapture charge (IHTM04112).

»Ê¹ÚÌåÓýapp relief is given by a percentage reduction (IHTM24140) in the value transferred by the transfer of value. This means that the relief is

  • allowed before the deduction of exemptions, (IHTM04022) or
  • given before any deduction is allowed under IHTA84/S165 for other tax borne by the donee (IHTM14013), and
  • calculated before any grossing up, (IHTM26071).

Specifically, it does not reduce the value of the property concerned for IHT purposes so that:

  • an express provision, IHTA84/S39A, is included to establish the relationship between the value of the property and the value transferred for the purpose of quantifying the spouse or civil partner exemption (IHTM11031), and
  • no reduction is made in the ‘historicâ€� value of property taken into account in determining the rate of tax chargeable in the relevant property trust regime.

»Ê¹ÚÌåÓýappre are detailed instructions about the allocation of exemptions at IHTM26101

In the context of relevant property trusts, references to the value transferred by a transfer of value are construed as including references to the amount on which tax is chargeable. So, in the unlikely event of there being a partially exempt occasion of charge in the relevant property trust regime, the exemption is deducted before the reliefs are allowed.