»Ê¹ÚÌåÓýapp

You may need to consider the interaction of business and agricultural relief where the property that has been replaced would have qualified in part for business relief in addition to agricultural relief. (IHTM25121). »Ê¹ÚÌåÓýapp operation of this is best illustrated by the example below.

Example

Adam owns and has farmed Fairfield for a number of years. He sells the property for £20m for development in October 2001. »Ê¹ÚÌåÓýapp agricultural value of Fairfield was only £3m.

In March 2002, Adam buys »Ê¹ÚÌåÓýapp Gallops for £9m (which is wholly attributable to agricultural value) to resume his farming business.

In April 2003, Adam dies. »Ê¹ÚÌåÓýapp Gallops then has a value of £10m, wholly agricultural.

»Ê¹ÚÌåÓýapp two year occupation (IHTM24071) condition in IHTA84/S118 (1) is satisfied and the ownership conditions for business relief (IHTM25301) are also satisfied. On A’s death, the agricultural relief is restricted by IHTA/S118 (3). »Ê¹ÚÌåÓýapp apportionment in IHTM24113 gives the following calculation of agricultural relief

(3,000,000 ÷ 9,000,000) × 10,000,000 =£3,333,333

So the agricultural relief on »Ê¹ÚÌåÓýapp Gallops is limited to £3,333,333. However, Adam had carried on a genuine farming business at Fairfield. If instead of selling Fairfield, he had died in October 2001, the non-agricultural value (£17m) of Fairfield would have qualified for business relief. So, the excess of £6,666,667 wholly qualifies for business relief because

• the ownership conditions in IHTA84/S107 (1) are satisfied, and
• there is no restriction of business relief under IHTA84/S107(2) because the relief is less than it would have been if the replacement had not been made.