(1) Where under the terms of a will or otherwise property is held for any person on condition that he survives another for a specified period of not more than six months, this Act shall apply as if the dispositions taking effect at the end of the period or, if he does not survive until then, on his death (including any such disposition which has effect by operation of law or is a separate disposition of the income from the property) had had effect from the beginning of the period.
(2) Subsection (1) above does not affect the application of this Act in relation to any distribution or application of property occurring before the dispositions there mentioned take effect.
Where a person becomes entitled to an interest in settled property but disclaims the interest, then, if the disclaimer is not made for a consideration in money or money’s worth, this Act shall apply as if he had not become entitled to the interest.
(1) Subject to the following provisions of this Part of this Act, where a close company makes a transfer of value, tax shall be charged as if each individual to whom an amount is apportioned under this section had made a transfer of value of such amount as after deduction of tax (if any) would be equal to the amount so apportioned, less the amount (if any) by which the value of his estate is more than it would be but for the company’s transfer; but for this purpose his estate shall be treated as not including any rights or interests in the company.
(2) For the purposes of subsection (1) above the value transferred by the company’s transfer of value shall be apportioned among the participators according to their respective rights and interests in the company immediately before the transfer, and any amount so apportioned to a close company shall be further apportioned among its participators, and so on; but—
(a) so much of that value as is attributable to any payment or transfer of assets to any person which falls to be taken into account in computing that person’s profits or gains or losses for the purposes of income tax or corporation tax (or would fall to be so taken into account but for section 1285 of the Corporation Tax Act 2009 (exemption for UK company distributions)) shall not be apportioned, and
(b) if any amount which would otherwise be apportioned to an individual who is not a long-term UK resident is attributable to the value of any property outside the United Kingdom, that amount shall not be apportioned.
(3) In determining for the purposes of this section whether a disposition made by a close company is a transfer of value or what value is transferred by such a transfer no account shall be taken of the surrender by the company, in pursuance of section 240 or 402 of the Taxes Act 1988, of any relief or of the benefit of any amount of advance corporation tax paid by it.
(4) Where the amount apportioned to a person under this section is 5 per cent. or less of the value transferred by the company’s transfer of value then, notwithstanding section 3(4) above, tax chargeable under subsection (1) above shall be left out of account in determining, with respect to any time after the company’s transfer, what previous transfers of value he has made.
(5) References in section 19 above to transfers of value made by a transferor and to the values transferred by them (calculated as there mentioned) shall be treated as including references to apportionments made to a person under this section and to the amounts for the tax on which (if charged) he would be liable.
(1) Where—
(a) the value of the estate of a company (“the transferee company”) is increased as the result of a transfer of value made by a close company (“the transferor company”), and
(b) an individual to whom part of the value transferred is apportioned under section 94 above has an interest in the transferee company (or in a company which is a participator of the transferee company or any of its participators, and so on),
subsection (2) below shall apply to the computation, for the purposes of section 94 above, of the amount to be offset, that is to say, the amount by which the value of his estate is more than it would be but for the transfer.
(2) Where this subsection applies—
(a) the increase in the value of the transferee company’s estate shall be taken to be such part of the value transferred as accounts for the increase, and
(b) the increase so computed shall be apportioned among the transferee company’s participators according to their respective rights and interests in the company immediately before the transfer (and, where necessary, further apportioned among their participators, and so on),
and the amount so apportioned to the individual shall be taken to be the amount to be offset.
Where part of a close company’s share capital consists of preference shares (within the meaning of section 1023(5) of the Corporation Tax Act 2010) and a transfer of value made by that or any other close company has only a small effect on the value of those shares, compared with its effect on the value of other parts of the company’s share capital, the preference shares shall be left out of account in determining the respective rights and interests of the participators for the purposes of sections 94 and 95 above.
(1) Where a close company (“the transferor company”) is a member, but not the principal company, of a group and—
(a) there is—
(i) a disposal of an asset by the transferor company, which is a disposal to which section 171(1) of the 1992 Act applies, or
(ii) by virtue of an election under section 171A(2) of that Act, a deemed transfer by the transferor company to another member of the group,. . .
(iii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(aa) the disposal is also, or the election gives rise to, a transfer of value, and
(b) the transfer of value has only a small effect on the value of the minority participators’ rights and interests in that company compared with its effect on the value of the other participators’ rights and interests in the company,
the rights and interests of the minority participators shall be left out of account in determining the respective rights and interests of the transferor company’s participators for the purpose of apportioning the value transferred under section 94 above.
(2) For the purposes of subsection (1) above—
(a) Section 170 of the 1992 Act (groups of companies: definitions) applies as for the purposes of sections 171 to 181 of that Act, and
(b) a minority participator is a participator of the transferor company who is not, and is not a person connected with, a participator of the principal company of the group or of any of the principal company’s participators;
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1) Where there is at any time—
(a) an alteration in so much of a close company’s share or loan capital as does not consist of quoted shares or quoted securities
(b) an alteration in any rights attaching to unquoted shares in or unquoted debentures of a close company,
the alteration shall be treated as having been made by a disposition made at that time by the participators, whether or not it would fall to be so treated apart from this section, and shall not be taken to have affected the value immediately before that time of the unquoted shares or unquoted debentures.
(2) In this section “alteration” includes extinguishment.
(3) The disposition referred to in subsection (1) above shall be taken to be one which is not a potentially exempt transfer
(1) Subsection (1) of section 94 above shall not apply in relation to a person who is a participator in his capacity as trustee of a settlement, but—
(a) the reference in subsection (2) of that section to sub-section (1) shall have effect as including a reference to subsection (2) of this section, and
(b) in relation to tax chargeable by virtue of subsection (2) of this section, sections 94(4) and 95 above shall apply with the necessary modifications.
(2) Where any part of the value transferred by a close company’s transfer of value is apportioned to a trustee of a settlement under section 94 above, then—
(a) if a qualifying interest in possession subsists in the settled property, a part of that interest corresponding to such part of the property as is of a value equal to the part so apportioned less the amount specified in subsection (3) below shall be treated for the purposes of Chapter II of Part III of this Act as having come to an end on the making of the transfer, and
(b) if no qualifying interest in possession subsists in the settled property, Chapter III of Part III of this Act shall have effect as if on the making of the transfer the trustee had made a disposition as a result of which the value of the settled property had been reduced by an amount equal to the part so apportioned less the amount specified in subsection (3) below;
and where a qualifying interest in possession subsists in part only of the settled property paragraphs (a) and (b) above shall apply with the necessary adjustments of the values and amounts referred to there.
(3) The amount referred to in paragraphs (a) and (b) of subsection (2) above is the amount (if any) by which the value of the settled property is more than it would be apart from the company’s transfer, leaving out of account the value of any rights or interests in the company.
100 Alterations of capital, etc. where participators are trustees.
(1) This section applies where, by virtue of section 98 above, an alteration in a close company’s share or loan capital or of any rights attaching to shares in or debentures of a close company is treated as a disposition made by the participators, and—
(a) a person is a participator in his capacity as trustee of a settlement, and
(b) the disposition would, if the trustee were beneficially entitled to the settled property, be a transfer of value made by him, and
(c) at the time of the alteration an individual is beneficially entitled to an interest in possession in the whole or part of so much of the settled property as consists of unquoted shares in or unquoted securities of the close company.
(1A) Where the interest in possession is one to which the individual became beneficially entitled on or after 22nd March 2006, this section applies only if the interest in possession is—
(a) an immediate post-death interest,
(b) a disabled person's interest, or
(c) a transitional serial interest,
or falls within section 5(1B) above.
(2) Where this section applies, such part of the individual’s interest shall be treated for the purposes of Chapter II of Part III of this Act as having come to an end at the time of the alteration as corresponds to the relevant decrease of the value of the property in which the interest subsists, that is to say the decrease caused by the alteration.
(1) Where a close company is entitled to an interest in possession in settled property the persons who are participators in relation to the company shall be treated for the purposes of this Act (except section 55) as being the persons entitled to that interest according to their respective rights and interests in the company.
(1A) Where the interest in possession mentioned in subsection (1) above is one to which the company became entitled on or after 22nd March 2006 (whether or not the company was a close company when it became entitled to the interest), subsection (1) above applies in relation to the interest only if it is—
(a) an immediate post-death interest, or
(b) a transitional serial interest,
or falls within section 5(1B) above.
(1B) Subsection (1C) below applies where any of the participators mentioned in subsection (1) above (“the prior participator”) disposes of rights and interests of his in the company to another person (“the later participator”).
(1C) If and so far as the later participator is a participator in the company by virtue of having any of the rights and interests disposed of, subsection (1) above is to be applied to him only as a participator in his own right (in particular, he is not to be treated by virtue of that subsection as having entitlement to the interest in possession as a result of disposal to him of entitlement that the prior participator was treated as having by virtue of that subsection, but this is without prejudice to the application of this Act in relation to the prior participator as the person making the disposal).
(2) Where—
(a) the participators mentioned in subsection (1) above include the trustees of a settlement, and
(b) a person is beneficially entitled to an interest in possession in the whole or part of the settled property by virtue of which the trustees are participators,
that person shall be treated for the said purposes as beneficially entitled to the whole or corresponding part of the interest to which the trustees would otherwise be treated as entitled under that subsection.
(1) In this Part of this Act—
“close company” means a company within the meaning of the Corporation Tax Acts which is (or would be if resident in the United Kingdom) a close company for the purposes of those Acts;
“participator”, in relation to any company, means any person who is (or would be if the company were resident in the United Kingdom) a participator in relation to that company within the meaning given by section 454 of the Corporation Tax Act 2010, other than a person who would be such a participator by reason only of being a loan creditor;
“qualifying interest in possession” has the meaning given by section 59 above.
(2) References in this Part of this Act to a person’s rights and interests in a company include references to rights and interests in the assets of the company available for distribution among the participators in the event of a winding up or in any other circumstances.
(1) In this Chapter references to a transfer of value include references to an occasion on which tax is chargeable under Chapter III of Part III of this Act (apart from section 79), and
(a) references to the value transferred by a transfer of value include references to the amount on which tax is then chargeable, and
(b) references to the transferor include references to the trustees of the settlement concerned.
(2) For the purposes of this Chapter a company and all its subsidiaries are members of a group, and “holding company” and “subsidiary” have the meaning given by section 1159 of and Schedule 6 to the Companies Act 2006
(3) In this Chapter “business” includes a business carried on in the exercise of a profession or vocation, but does not include a business carried on otherwise than for gain.
(1) Where the whole or part of the value transferred by a transfer of value is attributable to the value of any relevant business property, the whole or that part of the value transferred shall be treated as reduced by 50%. —
(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
...
(1A) But so much of the value transferred as—
(a) is attributable to the value of relevant business property that falls within section 105(1)(a), (b) or (bb),
(b) constitutes a chargeable transfer that is not an occasion on which tax is chargeable under Chapter 3 of Part 3 (charges on certain settlements etc), and
(c) does not exceed the amount of the 100% relief allowance available in relation to that chargeable transfer (see section 124D),
is to be treated (instead) as reduced by 100%.
(1B) And so much of the value transferred as—
(a) is attributable to the value of relevant business property that falls within section 105(1)(a), (b) or (bb),
(b) constitutes a chargeable transfer that is an occasion on which tax is chargeable under Chapter 3 of Part 3, and
(c) does not exceed the amount of the 100% trust relief allowance available in relation to that occasion (see sections 124G to 124K),
is to be treated (instead) as reduced by 100%.
(1C) Subsections (1) to (1B) are subject to the following provisions of this Chapter.
(2) For the purposes of this section, the value transferred by a transfer of value shall be calculated as a value on which no tax is chargeable.
(1) Subject to the following provisions of this section and to sections 106, 108, ..., 112(3) and 113 below, in this Chapter “relevant business property” means, in relation to any transfer of value,—
(a) property consisting of a business or interest in a business;
(aa) any unquoted shares that are traded on a recognised stock exchange;
(ab) any unquoted securities of a company—
(i) that are traded on a recognised stock exchange; , and
(ii) which (either by themselves or together with any unquoted shares in, or other unquoted securities of, the company that are owned by the transferor) gave the transferor control of the company immediately before the transfer;
(ac) any unquoted shares that are traded on an exchange outside the United Kingdom that is not a recognised stock exchange;
(ad) any unquoted securities of a company—
(i) that are traded on an exchange outside the United Kingdom that is not a recognised stock exchange, and
(ii) which (either by themselves or together with any unquoted shares in, or other unquoted securities of, the company that are owned by the transferor) gave the transferor control of the company immediately before the transfer;
(b) any other ... securities of a company which are unquoted and which (either by themselves or together with other such securities owned by the transferor and any unquoted shares so owned) gave the transferor control of the company immediately before the transfer;
(bb) any other unquoted shares in a company;
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(cc) shares in or securities of a company which are quoted and which (either by themselves or together with other such shares or securities owned by the transferor) gave the transferor control of the company immediately before the transfer;
(d) any land or building, machinery or plant which, immediately before the transfer, was used wholly or mainly for the purposes of a business carried on by a company of which the transferor then had control or by a partnership of which he then was a partner; and
(e) any land or building, machinery or plant which, immediately before the transfer, was used wholly or mainly for the purposes of a business carried on by the transferor and was settled property in which he was then beneficially entitled to an interest in possession.
(1A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1ZA) In subsection (1) above “quoted”, in relation to any shares or securities, means listed on a recognised stock exchange and “unquoted”, in relation to any shares or securities, means not so listed.
(2) Shares in or securities of a company do not fall within subsection (1) ... (cc) above if—
(a) they would not have been sufficient, without other property, to give the transferor control of the company immediately before the transfer, and
(b) their value is taken by virtue of section 176 below to be less than the value previously determined.
(2A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) A business or interest in a business, or shares in or securities of a company, are not relevant business property if the business or, as the case may be, the business carried on by the company consists wholly or mainly of one or more of the following, that is to say, dealing in securities, stocks or shares, land or buildings or making or holding investments.
(4) Subsection (3) above—
(a) does not apply to any property if the business concerned is wholly that of a market maker or is that of a discount house and (in either case) is carried on in the United Kingdom, and
(b) does not apply to shares in or securities of a company if the business of the company consists wholly or mainly in being a holding company of one or more companies whose business does not fall within that subsection.
(4A) Subsection (3) above also does not apply to any property if the business concerned is of a description set out in regulations under section 106(5) of the Finance Act 1986.
(5) Shares in or securities of a company are not relevant business property in relation to a transfer of value if at the time of the transfer a winding-up order has been made in respect of the company or the company has passed a resolution for voluntary winding-up or is otherwise in process of liquidation, unless the business of the company is to continue to be carried on after a reconstruction or amalgamation and the reconstruction or amalgamation either is the purpose of the winding-up or liquidation or takes place not later than one year after the transfer of value.
(6) Land, a building, machinery or plant owned by the transferor and used wholly or mainly for the purposes of a business carried on as mentioned in subsection (1)(d) or (e) above is not relevant business property in relation to a transfer of value, unless the business or the transferor’s interest in it is, or shares or securities of the company carrying on the business immediately before the transfer are, relevant business property in relation to the transfer.
(7) In this section “market maker” means a person who—
(a) holds himself out at all normal times in compliance with the rules of The Stock Exchange as willing to buy and sell securities, stocks or shares at a price specified by him, and
(b) is recognised as doing so by the Council of The Stock Exchange.
Property is not relevant business property in relation to a transfer of value unless it was owned by the transferor throughout the two years immediately preceding the transfer.
(1) Property shall be treated as satisfying the condition in section 106 above if—
(a) it replaced other property and it, that other property and any property directly or indirectly replaced by that other property were owned by the transferor for periods which together comprised at least two years falling within the five years immediately preceding the transfer of value, and
(b) any other property concerned was such that, had the transfer of value been made immediately before it was replaced, it would (apart from section 106) have been relevant business property in relation to the transfer.
(2) In a case falling within subsection (1) above relief under this Chapter shall not exceed what it would have been had the replacement or any one or more of the replacements not been made.
(3) For the purposes of subsection (2) above changes resulting from the formation, alteration or dissolution of a partnership, or from the acquisition of a business by a company controlled by the former owner of the business, shall be disregarded.
(4) Without prejudice to subsection (1) above, where any shares falling within section 105(1)(aa) , (ac) or (bb) above which are owned by the transferor immediately before the transfer would under any of the provisions of sections 126 to 136 of the 1992 Act be identified with other shares previously owned by him his period of ownership of the first-mentioned shares shall be treated for the purposes of section 106 above ... as including his period of ownership of the other shares.
For the purposes of sections 106 and 107 above, where the transferor became entitled to any property on the death of another person—
(a) he shall be deemed to have owned it from the date of the death, and
(b) if that other person was his spouse or civil partner he shall also be deemed to have owned it for any period during which the spouse or civil partner owned it.
(1) Where—
(a) the whole or part of the value transferred by a transfer of value (in this section referred to as the earlier transfer) was eligible for relief under this Chapter (or would have been so eligible if such relief had been capable of being given in respect of transfers of value made at that time), and
(b) the whole or part of the property which, in relation to the earlier transfer, was relevant business property became, through the earlier transfer, the property of the person or of the spouse or civil partner of the person who is the transferor in relation to a subsequent transfer of value, and
(c) that property or part, or any property directly or indirectly replacing it, would (apart from section 106 above) have been relevant business property in relation to the subsequent transfer of value, and
(d) either the earlier transfer was, or the subsequent transfer of value is, a transfer made on the death of the transferor,
the property which would have been relevant business property but for section 106 above shall be relevant business property notwithstanding that section.
(2) Where the property which, by virtue of subsection (1) above, is relevant business property replaced the property or part referred to in paragraph (c) of that subsection, relief under this Chapter shall not exceed what it would have been had the replacement or any one or more of the replacements not been made, but section 107(3) above shall apply with the necessary modifications for the purposes of this subsection.
(3) Where, under the earlier transfer, the amount of the value transferred which was attributable to the property or part referred to in subsection (1)(c) above was part only of its value, a like part only of the value which (apart from this subsection) would fall to be reduced under this Chapter by virtue of this section shall be so reduced.
For the purposes of this Chapter—
(a) the value of a business or of an interest in a business shall be taken to be its net value;
(b) the net value of a business is the value of the assets used in the business (including goodwill) reduced by the aggregate amount of any liabilities incurred for the purposes of the business;
(c) in ascertaining the net value of an interest in a business, no regard shall be had to assets or liabilities other than those by reference to which the net value of the entire business would fall to be ascertained.
Where a company is a member of a group and the business of any other company which is a member of the group falls within section 105(3) above, then, unless either—
(a) that business also falls within section 105(4), or
(b) that business consists wholly or mainly in the holding of land or buildings wholly or mainly occupied by members of the group whose business either does not fall within section 105(3) or falls within both section 105(3) and section 105(4),
the value of shares in or securities of the company shall be taken for the purposes of this Chapter to be what it would be if that other company were not a member of the group.
(1) In determining for the purposes of this Chapter what part of the value transferred by a transfer of value is attributable to the value of any relevant business property so much of the last-mentioned value as is attributable to any excepted assets within the meaning of subsection (2) below shall be left out of account.
(2) An asset is an excepted asset in relation to any relevant business property if it was neither—
(a) used wholly or mainly for the purposes of the business concerned throughout the whole or the last two years of the relevant period defined in subsection (5) below, nor
(b) required at the time of the transfer for future use for those purposes;
but where the business concerned is carried on by a company which is a member of a group, the use of an asset for the purposes of a business carried on by another company which at the time of the use and immediately before the transfer was also a member of that group shall be treated as use for the purposes of the business concerned, unless that other company’s membership of the group falls to be disregarded under section 111 above.
(3) Subsection (2) above does not apply in relation to an asset which is relevant business property by virtue only of section 105(1)(d) above, and an asset is not relevant business property by virtue only of that provision unless either—
(a) it was used as mentioned in that provision throughout the two years immediately preceding the transfer of value, or
(b) it replaced another asset so used and it and the other asset and any asset directly or indirectly replaced by that other asset were so used for periods which together comprised at least two years falling within the five years immediately preceding the transfer of value;
but in a case where section 109 above applies this condition shall be treated as satisfied if the asset (or it and the asset or assets replaced by it) was or were so used throughout the period between the earlier and the subsequent transfer mentioned in that section (or throughout the part of that period during which it or they were owned by the transferor or the transferor’s spouse or civil partner).
(4) Where part but not the whole of any land or building is used exclusively for the purposes of any business and the land or building would, but for this subsection, be an excepted asset, or, as the case may be, prevented by subsection (3) above from being relevant business property, the part so used and the remainder shall for the purposes of this section be treated as separate assets, and the value of the part so used shall (if it would otherwise be less) be taken to be such proportion of the value of the whole as may be just.
(5) For the purposes of this section the relevant period, in relation to any asset, is the period immediately preceding the transfer of value during which the asset (or, if the relevant business property is an interest in a business, a corresponding interest in the asset) was owned by the transferor or, if the business concerned is that of a company, was owned by that company or any other company which immediately before the transfer of value was a member of the same group.
(6) For the purposes of this section an asset shall be deemed not to have been used wholly or mainly for the purposes of the business concerned at any time when it was used wholly or mainly for the personal benefit of the transferor or of a person connected with him.
Where any property would be relevant business property in relation to a transfer of value but a binding contract for its sale has been entered into at the time of the transfer, it is not relevant business property in relation to the transfer unless—
(a) the property is a business or interest in a business and the sale is to a company which is to carry on the business and is made in consideration wholly or mainly of shares in or securities of that company, or
(b) the property is shares in or securities of a company and the sale is made for the purpose of reconstruction or amalgamation.
113A Transfers within seven years before death of transferor.
(1) Where any part of the value transferred by a potentially exempt transfer which proves to be a chargeable transfer would (apart from this section) be reduced in accordance with the preceding provisions of this Chapter, it shall not be so reduced unless the conditions in subsection (3) below are satisfied.
(2) Where—
(a) any part of the value transferred by any chargeable transfer, other than a potentially exempt transfer, is reduced in accordance with the preceding provisions of this Chapter, and
(b) the transfer is made within seven years of the death of the transferor,
then, unless the conditions in subsection (3) below are satisfied, the additional tax chargeable by reason of the death shall be calculated as if the value transferred had not been so reduced.
(2A) Where subsection (2) applies, the chargeable transfer is to be ignored for the purposes of determining the amount of the 100% relief allowance available in relation to a chargeable transfer under section 124D.
(3) The conditions referred to in subsections (1) and (2) above are—
(a) that the original property was owned by the transferee throughout the period beginning with the date of the chargeable transfer and ending with the death of the transferor; and
(b) except to the extent that the original property consists of shares or securities to which subsection (3A) below applies that, in relation to a notional transfer of value made by the transferee immediately before the death, the original property would (apart from section 106 above) be relevant business property.
(3A) This subsection applies to shares or securities—
(a) which were quoted at the time of the chargeable transfer referred to in subsection (1) or subsection (2) above; or
(b) which fell within any of paragraphs (aa) to (bb) of section 105(1) above in relation to that transfer and were unquoted throughout the period referred to in subsection (3)(a) above.
(3B) In subsection (3A) above “quoted”, in relation to any shares or securities, means listed on a recognised stock exchange and “unquoted”, in relation to any shares or securities, means not so listed.
(4) If the transferee has died before the transferor, the reference in subsection (3) above to the death of the transferor shall have effect as a reference to the death of the transferee.
(5) If the conditions in subsection (3) above are satisfied only with respect to part of the original property, then,—
(a) in a case falling within subsection (1) above, only a proportionate part of so much of the value transferred as is attributable to the original property shall be reduced in accordance with the preceding provisions of this Chapter, and
(b) in a case falling within subsection (2) above, the additional tax shall be calculated as if only a proportionate part of so much of the value transferred as was attributable to the original property had been so reduced.
(6) Where any shares owned by the transferee immediately before the death in question—
(a) would under any of the provisions of sections 126 to 136 of the 1992 Act be identified with the original property (or part of it), or
(b) were issued to him in consideration of the transfer of a business or interest in a business consisting of the original property (or part of it),
they shall be treated for the purposes of this section as if they were the original property (or that part of it).
(7) This section has effect subject to section 113B below.
(7A) The provisions of this Chapter for the reduction of value transferred shall be disregarded in any determination for the purposes of this section of whether there is a potentially exempt or chargeable transfer in any case.
(8) In this section—
“the original property” means the property which was relevant business property in relation to the chargeable transfer referred to in subsection (1) or subsection (2) above; and
“the transferee” means the person whose property the original property became on that chargeable transfer or, where on the transfer the original property became or remained settled property in which no qualifying interest in possession (within the meaning of Chapter III of Part III of this Act) subsists, the trustees of the settlement.
113B Application of section 113A to replacement property.
(1) Subject to subsection (2) below, this section applies where—
(a) the transferee has disposed of all or part of the original property before the death of the transferor; and
(b) the whole of the consideration received by him for the disposal has been applied by him in acquiring other property (in this section referred to as “the replacement property”).
(2) This section does not apply unless—
(a) the replacement property is acquired, or a binding contract for its acquisition is entered into, within the allowed period after the disposal of the original property (or, as the case may be, the part concerned); and
(b) the disposal and acquisition are both made in transactions at arm’s length or on terms such as might be expected to be included in a transaction at arm’s length.
(3) Where this section applies, the conditions in section 113A(3) above shall be taken to be satisfied in relation to the original property (or, as the case may be, the part concerned) if—
(a) the replacement property is owned by the transferee immediately before the death of the transferor; and
(b) throughout the period beginning with the date of the chargeable transfer and ending with the death (disregarding any period between the disposal and acqusition) either the original property or the replacement property was owned by transferee; and
(c) in relation to a notional transfer of value made by the transferee immediately before the death, the replacement property would (apart from section 106 above) be relevant business property.
(4) If the transferee has died before the transferor, any reference in subsections (1) to (3) above to the death of the transferor shall have effect as a reference to the death of the transferee.
(5) In any case where—
(a) all or part of the original property has been disposed of before the death of the transferor or is excluded by section 113 above from being relevant business property in relation to the notional transfer of value referred to in section 113A(3)(b) above, and
(b) the replacement property is acquired, or a binding contract for its acquisition is entered into, after the death of the transferor but within the allowed period after the disposal of the original property or part, and
(c) the transferor dies before the transferee,
subsection (3) above shall have effect with the omission of paragraph (a), and as if any reference to a time immediately before the death of the transferor or to the death were a reference to the time when the replacement property is acquired.
(6) Section 113A(6) above shall have effect in relation to the replacement property as it has effect in relation to the original property.
(7) Where a binding contract for the disposal of any property is entered into at any time before the disposal of the property, the disposal shall be regarded for the purposes of subsections (2)(a) and (5)(b) above as taking place at that time.
(8) In this section “the original property” and “the transferee” have the same meaning as in section 113A above and “allowed period” means the period of three years or such longer period as the Board may allow.
(1) Where any part of the value transferred by a transfer of value is reduced under Chapter II of this Part of this Act by reference to the agricultural value of any property, or would be so reduced but for section 121(3), such part of the value transferred as is or would be so reduced under that Chapter shall not be reduced under this Chapter.
(2) Where the value transferred by a transfer of value is reduced under section 129 below by reference to the tax chargeable on the disposal of any trees or underwood, the value to be reduced under section 104 above shall be the value as reduced under section 129 (but subject to section 104(2) above).
(1) In this Chapter references to a transfer of value include references to an occasion on which tax is chargeable under Chapter III of Part III of this Act (apart from section 79) and—
(a) references to the value transferred by a transfer of value include references to the amount on which tax is then chargeable, and
(b) references to the transferor include references to the trustees of the settlement concerned.
(2) In this Chapter “agricultural property” means agricultural land or pasture and includes woodland and any building used in connection with the intensive rearing of livestock or fish if the woodland or building is occupied with agricultural land or pasture and the occupation is ancillary to that of the agricultural land or pasture; and also includes such cottages, farm buildings and farmhouses, together with the land occupied with them, as are of a character appropriate to the property.
(3) For the purposes of this Chapter the agricultural value of any agricultural property shall be taken to be the value which would be the value of the property if the property were subject to a perpetual covenant prohibiting its use otherwise than as agricultural property ....
(4) For the purposes of this Chapter the breeding and rearing of horses on a stud farm and the grazing of horses in connection with those activities shall be taken to be agriculture and any buildings used in connection with those activities to be farm buildings.
(5) This Chapter applies to agricultural property only if it is in the United Kingdom.
(1) Where the whole or part of the value transferred by a transfer of value is attributable to the agricultural value of agricultural property, the whole or that part of the value transferred shall be treated as reduced by 50%.
(1A) But so much of that whole or that part as—
(a) constitutes a chargeable transfer that is not an occasion on which tax is chargeable under Chapter 3 of Part 3 (charges on certain settlements etc), and
(b) does not exceed the amount of the 100% relief allowance available in relation to that chargeable transfer (see section 124D),
is to be treated (instead) as reduced by 100%, but only if the transferor’s interest condition is met.
(1B) And so much of that whole or that part as—
(a) constitutes a chargeable transfer that is an occasion on which tax is chargeable under Chapter 3 of Part 3, and
(b) does not exceed the amount of the 100% trust relief allowance available in relation to that occasion (see sections 124G to 124K),
is to be treated (instead) as reduced by 100%, but only if the transferor’s interest condition is met.
(1C) Subsections (1) to (1B) are subject to the following provisions of this Chapter.
(2) For the purposes of subsections (1A) and (1B), the transferor’s interest condition is met if ...—
(a) the interest of the transferor in the property immediately before the transfer carries the right to vacant possession or the right to obtain it within the next twelve months, or
(b) the transferor has been beneficially entitled to that interest since before 10th March 1981 and the conditions set out in subsection (3) below are satisfied; or
(c) the interest of the transferor in the property immediately before the transfer does not carry either of the rights mentioned in paragraph (a) above because the property is let on a tenancy beginning on or after 1st September 1995;
...
(2A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) The conditions referred to in subsection (2)(b) above are—
(a) that if the transferor had disposed of his interest by a transfer of value immediately before 10th March 1981 and duly made a claim under paragraph 1 of Schedule 8 to the Finance Act 1975, the value transferred would have been computed in accordance with paragraph 2 of that Schedule and relief would not have been limited by paragraph 5 of that Schedule (restriction to £250,000 or one thousand acres); and
(b) that the transferor’s interest did not at any time during the period beginning with 10th March 1981 and ending with the date of the transfer carry a right mentioned in subsection (2)(a) above, and did not fail to do so by reason of any act or deliberate omission of the transferor during that period.
(4) Where the transferor’s interest condition would be met but for a limitation on relief that would have been imposed (as mentioned in subsection (3)(a) above) by paragraph 5 of Schedule 8 to the Finance Act 1975, subsections (1A) and (1B) have effect as if—
(a) the transferor’s interest condition were met, and
(b) after paragraph (a) of each subsection there were inserted—
(aa) does not exceed the amount which would have attracted relief under Schedule 8 to the Finance Act 1975, and
(5) In determining for the purposes of subsections (3)(a) and (4) above whether or to what extent relief under Schedule 8 to the Finance Act 1975 would have been limited by paragraph 5 of that Schedule, that paragraph shall be construed as if references to relief given under that Schedule in respect of previous chargeable transfers included references to—
(a) relief given under this Chapter by virtue of subsection (2)(b) or (4) above, and
(b) relief given under Schedule 14 to the Finance Act 1981 by virtue of paragraph 2(2)(b) or (4) of that Schedule,
in respect of previous chargeable transfers made on or after 10th March 1981.
(5A) Where, in consequence of the death on or after 1st September 1995 of the tenant or, as the case may be, the last surviving tenant of any property, the tenancy—
(a) becomes vested in a person, as a result of his being a person beneficially entitled under the deceased tenant’s will or other testamentary writing or on his intestacy, and
(b) is or becomes binding on the landlord and that person as landlord and tenant respectively,
subsection (2)(c) above shall have effect as if the tenancy so vested had been a tenancy beginning on the date of the death.
(5B) Where in consequence of the death on or after 1st September 1995 of the tenant or, as the case may be, the last surviving tenant of any property, a tenancy of the property or of any property comprising the whole or part of it—
(a) is obtained by a person under or by virtue of an enactment, or
(b) is granted to a person in circumstances such that he is already entitled under or by virtue of an enactment to obtain such a tenancy, but one which takes effect on a later date, or
(c) is granted to a person who is or has become the only or only remaining applicant, or the only or only remaining person eligible to apply, under a particular enactment for such a tenancy in the particular case,
subsection (2)(c) above shall have effect as if the tenancy so obtained or granted had been a tenancy beginning on the date of the death.
(5C) Subsection (5B) above does not apply in relation to property situate in Scotland.
(5D) If, in a case where the transferor dies on or after 1st September 1995,—
(a) the tenant of any property has, before the death, given notice of intention to retire in favour of a new tenant, and
(b) the tenant’s retirement in favour of the new tenant takes place after the death but not more than thirty months after the giving of the notice,
subsection (2)(c) above shall have effect as if the tenancy granted or assigned to the new tenant had been a tenancy beginning immediately before the transfer of value which the transferor is treated by section 4(1) above as making immediately before his death.
(5E) In subsection (5D) above and this subsection—
“the new tenant” means—
the person or persons identified in a notice of intention to retire in favour of a new tenant as the person or persons who it is desired should become the tenant of the property to which that notice relates; or
the survivor or survivors of the persons so identified, whether alone or with any other person or persons;
“notice of intention to retire in favour of a new tenant” means, in the case of any property, a notice or other written intimation given to the landlord by the tenant, or (in the case of a joint tenancy or tenancy in common) all of the tenants, of the property indicating, in whatever terms, his or their wish that one or more persons identified in the notice or intimation should become the tenant of the property;
“the retiring tenant’s tenancy” means the tenancy of the person or persons giving the notice of intention to retire in favour of a new tenant;
“the tenant’s retirement in favour of the new tenant” means—
the assignment, or (in Scotland) assignation, of the retiring tenant’s tenancy to the new tenant in circumstances such that the tenancy is or becomes binding on the landlord and the new tenant as landlord and tenant respectively; or
the grant of a tenancy of the property which is the subject of the retiring tenant’s tenancy, or of any property comprising the whole or part of that property, to the new tenant and the acceptance of that tenancy by him;
and, except in Scotland, “grant” and “acceptance” in paragraph (b) above respectively include the deemed grant, and the deemed acceptance, of a tenancy under or by virtue of any enactment.
(6) For the purposes of this Chapter the interest of one of two or more joint tenants or tenants in common (or, in Scotland, joint owners or owners in common) shall be taken to carry a right referred to in subsection (2)(a) above if the interests of all of them together carry that right.
(7) For the purposes of this section, the value transferred by a transfer of value shall be calculated as a value on which no tax is chargeable.
(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subject to the following provisions of this Chapter, section 116 above does not apply to any agricultural property unless—
(a) it was occupied by the transferor for the purposes of agriculture throughout the period of two years ending with the date of the transfer, or
(b) it was owned by him throughout the period of seven years ending with that date and was throughout that period occupied (by him or another) for the purposes of agriculture.
(1) Where the agricultural property occupied by the transferor on the date of the transfer replaced other agricultural property, the condition stated in section 117(a) above shall be treated as satisfied if it, the other property and any agricultural property directly or indirectly replaced by the other property were occupied by the transferor for the purposes of agriculture for periods which together comprised at least two years falling within the five years ending with that date.
(2) Where the agricultural property owned by the transferor on the date of the transfer replaced other agricultural property, the condition stated in section 117(b) above shall be treated as satisfied if it, the other property and any agricultural property directly or indirectly replaced by the other property were, for periods which together comprised at least seven years falling within the ten years ending with that date, both owned by the transferor and occupied (by him or another) for the purposes of agriculture.
(3) In a case falling within subsection (1) or (2) above relief under this Chapter shall not exceed what it would have been had the replacement or any one or more of the replacements not been made.
(4) For the purposes of subsection (3) above changes resulting from the formation, alteration or dissolution of a partnership shall be disregarded.
(1) For the purposes of sections 117 and 118 above, occupation by a company which is controlled by the transferor shall be treated as occupation by the transferor.
(2) For the purposes of sections 117 and 118 above, occupation of any property by a Scottish partnership shall, notwithstanding section 4(2) of the Partnership Act 1890, be treated as occupation of it by the partners.
(1) For the purposes of section 117 above, where the transferor became entitled to any property on the death another person—
(a) he shall be deemed to have owned it (and, if he subsequently occupies it, to have occupied it) from the date of the death, and
(b) if that other person was his spouse or civil partner he shall also be deemed to have occupied it for the purposes of agriculture for any period for which it was so occupied by his spouse or civil partner , and to have owned it for any period for which his spouse or civil partner owned it.
(2) Where the transferor became entitled to his interest on the death of his spouse or civil partner on or after 10th March 1981—
(a) he shall for the purposes of section 116(2)(b) above be deemed to have been beneficially entitled to it for any period for which his spouse or civil partnerwas beneficially entitled to it;
(b) the condition set out in section 116(3)(a) shall be taken to be satisfied if and only if it is satisfied in relation to his spouse or civil partner; and
(c) the condition set out in section 116(3)(b) shall be taken to be satisfied only if it is satisfied both in relation to him and in relation to his spouse or civil partner.
(1) Where—
(a) the whole or part of the value transferred by a transfer of value (in this section referred to as the earlier transfer) was eligible for relief under this Chapter (or would have been so eligible if such relief had been capable of being given in respect of transfers of value made at that time), and
(b) the whole or part of the property which, in relation to the earlier transfer, was or would have been eligible for relief became, through the earlier transfer, the property of the person (or of the spouse or civil partner of the person) who is the tranferor in relation to a subsequent transfer of value and is at the time of the subsequent transfer occupied for the purposes of agriculture either by that person or by the personal representative of the transferor in relation to the earlier transfer, and
(c) that property or part or any property directly or indirectly replacing it would (apart from section 117 above) have been eligible for relief in relation to the subsequent transfer of value, and
(d) either the earlier transfer was, or the subsequent transfer of value is, a transfer made on the death of the transferor,
the property which would have been eligible for relief but for section 117 above shall be eligible for relief notwithstanding that section.
(2) Where the property which, by virtue of subsection (1) above, is eligible for relief replaced the property or part referred to in paragraph (c) of that subsection, relief under this Chapter shall not exceed what it would have been had the replacement or any one or more of the replacements not been made, but section 118(4) above shall apply for the purposes of this subsection as it applies for the purposes of section 118(3).
(3) Where, under the earlier transfer the amount of the value transferred which was attributable to the property or part referred to in subsection (1)(c) above was part only of its value, a like part only of the value which (apart from this subsection) would fall to be reduced under this Chapter by virtue of this section shall be so reduced.
(1) Where the whole or part of the value transferred is attributable to the value of shares in or securities of a company it shall be taken for the purposes of this Chapter to be attributable (so far as appropriate) to the agricultural value of agricultural property if and only if—
(a) the agricultural property forms part of the company’s assets and part of the value of the shares or securities can be attributed to the agricultural value of the agricultural property, and
(b) the shares or securities gave the transferor control of the company immediately before the transfer.
(2) Shares or securities shall not be regarded for the purposes of subsection (1)(b) above as giving the transferor control of a company if—
(a) they would not have been sufficient, without other property, to give him control of the company immediately before the transfer, and
(b) their value is taken by virtue of section 176 below to be less than the value previously determined.
(3) Where subsection (1) above applies—
(a) the references in section 116(2)(a) and (3)(b) above to the transferor’s interest shall be construed as references to the company’s interest, and
(b) section 123(1) below shall apply instead of section 117 above.
(1) Section 116 above shall not apply by virtue of section 122(1) above unless—
(a) the agricultural property—
(i) was occupied by the company for the purposes of agriculture throughout the period of two years ending with the date of the transfer, or
(ii) was owned by the company throughout the period of seven years ending with that date and was throughout that period occupied (by the company or another) for the purposes of agriculture, and
(b) the shares or securities were owned by the transferor—
(i) in a case within paragraph (a)(i) above, throughout the period there mentioned, or
(ii) in a case within paragraph (a)(ii) above, throughout the period there mentioned.
(2) Subsections (1) and (2) of section 118 above shall apply in relation to the conditions stated in subsection (1)(a) above as they apply in relation to the conditions stated in section 117 taking references to the transferor as references to the company.
(3) Where the shares or securities owned by the transferor on the date of the transfer replaced other eligible property (that is to say, agricultural property or shares or securities the value of which is wholly or partly attributable to the value of such property) the condition stated in subsection (1)(b) above shall be treated as satisfied if the shares or securities, the other eligible property which they replaced and any eligible property directly or indirectly replaced by the other eligible property were owned by the transferor for periods which together comprised—
(a) in a case within subsection (1)(a)(i) above, at least two years falling within the five years ending with that date, or
(b) in a case within subsection (1)(a)(ii) above, at least seven years falling within the ten years ending with that date.
(4) Subsections (3) and (4) of section 118 above shall have effect in relation to a case falling within subsections (2) and (3) above as they have effect in relation to a case falling within subsections (1) and (2) of that section.
(5) For the purposes of subsection (1) above, a company shall be treated as having occupied the agricultural property at any time when it was occupied by a person who subsequently controls the company.
(1) Section 116 above shall not apply to agricultural property if at the time of the transfer the transferor has entered into a binding contract for its sale, except where the sale is to a company and is made wholly or mainly in consideration of shares in or securities of the company which will give the transferor control of the company.
(2) Section 116 above shall not apply by virtue of section 122(1) above if at the time of the transfer the transferor has entered into a binding contract for the sale of the shares or securities concerned, except where the sale is made for the purpose of reconstruction or amalgamation.
124A Transfers within seven years before death of transferor.
(1) Where any part of the value transferred by a potentially exempt transfer which proves to be a chargeable transfer would (apart from this section) be reduced in accordance with the preceding provisions of this Chapter, it shall not be so reduced unless the conditions in subsection (3) below are satisfied.
(2) Where—
(a) any part of the value transferred by any chargeable transfer, other than a potentially exempt transfer, is reduced in accordance with the preceding provisions of this Chapter, and
(b) the transfer is made within seven years of the death of the transferor,
then, unless the conditions in subsection (3) below are satisfied, the additional tax chargeable by reason of the death shall be calculated as if the value transferred had not been so reduced.
(2A) Where subsection (2) applies, the chargeable transfer is to be ignored for the purposes of determining the amount of the 100% relief allowance available in relation to a chargeable transfer under section 124D.
(3) The conditions referred to in subsections (1) and (2) above are—
(a) that the original property was owned by the transferee throughout the period beginning with the date of the chargeable transfer and ending with the death of the transferor (in this subsection referred to as “the relevant period”) and it is not at the time of the death subject to a binding contract for sale; and
(b) except in a case falling within paragraph (c) below, that the original property is agricultural property immediately before the death and has been occupied (by the transferee or another) for the purposes of agriculture throughout the relevant period; and
(c) where the original property consists of shares in or securities of a company, that throughout the relevant period the agricultural property to which section 116 above applied by virtue of section 122(1) above on the chargeable transfer was owned by the company and occupied (by the company or another) for the purposes of agriculture.
(4) If the transferee has died before the transferor, the reference in subsection (3) above to the death of the transferor shall have effect as a reference to the death of the transferee.
(5) If the conditions in subsection (3) above are satisfied only with respect to part of the original property, then,—
(a) in a case falling within subsection (1) above, only a proportionate part of so much of the value transferred as is attributable to the original property shall be reduced in accordance with the preceding provisions of this Chapter, and
(b) in a case falling within subsection (2) above, the additional tax shall be calculated as if only a proportionate part of so much of the value transferred as was attributable to the original property had been so reduced.
(6) Where any shares owned by the transferee immediately before the death in question—
(a) would under any of the provisions of sections 126 to 136 of the 1992 Act be identified with the original property (or part of it), or
(b) were issued to him in consideration of the transfer of agricultural property consisting of the original property (or part of it),
his period of ownership of the original property shall be treated as including his period of ownership of the shares.
(7) This section has effect subject to section 124B below.
(7A) The provisions of this Chapter for the reduction of value transferred shall be disregarded in any determination for the purposes of this section of whether there is a potentially exempt or chargeable transfer in any case.
(8) In this section—
“the original property” means the property which, in relation to the chargeable transfer referred to in subsection (1) or subsection (2) above, was either agricultural property to which section 116 above applied or shares or securities of a company owning agricultural property to which that section applied by virtue of section 122(1) above; and
“the transferee” means the person whose property the original property became on that chargeable transfer or, where on the transfer the original property became or remained settled property in which no qualifying interest in possession (within the meaning of Chapter III of Part III of this Act) subsists, the trustees of the settlement.
124B Application of section 124A to replacement property.
(1) Subject to subsection (2) below, this section applies where—
(a) the transferee has disposed of all or part of the original property before the death of the transferor; and
(b) the whole of the consideration received by him for the disposal has been applied by him in acquiring other property (in this section referred to as “the replacement property”).
(2) This section does not apply unless—
(a) the replacement property is acquired, or a binding contract for its acquisition is entered into, within the allowed period after the disposal of the original property (or, as the case may be, the part concerned); and
(b) the disposal and acquisition are both made in transactions at arm’s length or on terms such as might be expected to be included in a transaction at arm’s length.
(3) Where this section applies, the conditions in section 124A(3) above shall be taken to be satisfied in relation to the original property (or, as the case may be, the part concerned) if—
(a) the replacement property is owned by the transferee immediately before the death of the transferor and is not at that time subject to a binding contract for sale; and
(b) throughout the period beginning with the date of the chargeable transfer and ending with the disposal, the original property was owned by the transferee and occupied (by the transferee or another) for the purposes of agriculture; and
(c) throughout the period beginning with the date when the transferee acquired the replacement property and ending with the death, the replacement property was owned by the transferee and occupied (by the transferee or another) for the purposes of agriculture; and
(d) the replacement property is agricultural property immediately before the death.
(4) If the transferee has died before the transferor, any reference in subsections (1) to (3) above to the death of the transferor shall have effect as a reference to the death of the transferee.
(5) In any case where—
(a) all or part of the original property has been disposed of before the death of the transferor or is subject to a binding contract for sale at the time of the death, and
(b) the replacement property is acquired, or a binding contract for its acquisition is entered into, after the death of the transferor but within the allowed period after the disposal of the original property or part, and
(c) the transferor dies before the transferee,
subsection (3) above shall have effect with the omission of paragraphs (a) and (c), and as if any reference to a time immediately before the death of the transferor were a reference to the time when the replacement property is acquired.
(6) Section 124A(6) above shall have effect in relation to the replacement property as it has effect in relation to the original property.
(7) Where a binding contract for the disposal of any property is entered into at any time before the disposal of the property, the disposal shall be regarded for the purposes of subsections (2)(a) and (5)(b) above as taking place at that time.
(8) In this section “the original property” and “the transferee” have the same meaning as in section 124A above and “allowed period” means the period of three years or such longer period as the Board may allow.
(1) For the purposes of this Chapter, land is to be treated as agricultural property occupied for the purposes of agriculture if—
(a) the land was agricultural property throughout the period of two years ending with the day on which it became subject to an environmental management agreement, and
(b) since that day, it has been used and managed in accordance with the agreement (whether or not the agreement is still in place).
(2) A building occupied with land that is treated as agricultural property occupied for the purposes of agriculture under subsection (1) is to be treated in the same way if—
(a) it is used in connection with the use and management of the land in accordance with the environmental management agreement (whether or not the agreement is still in place) and is of a character appropriate to the land,
(b) either—
(i) it was built for the purpose of being used in connection with that use and management (whether or not the agreement was still in place), or
(ii) it was occupied with the land immediately before the land became subject to the environmental management agreement and was of a character appropriate to the land as it stood at that time, and
(c) it is not otherwise agricultural property occupied for the purposes of agriculture.
(3) For the purposes of subsection (2), where a building is occupied with land that is treated as agricultural property under subsection (1) and land that is otherwise agricultural property occupied for the purposes of agriculture, the question of whether the building is of a character appropriate to the land is to be considered by reference to all of that land.
(4) The agricultural value of property that is agricultural property as a result of this section is to be taken to be the value that would be the value of the property if it were subject to a perpetual covenant prohibiting its use otherwise than in accordance with the environmental management agreement (whether or not the agreement is still in place) (and section 115(3) does not apply).
(5) In subsection (1)(a) the reference to agricultural property includes land treated as agricultural property under this section.
(6) In this section—
“environmental management agreement” means a legally enforceable agreement between an occupier or other person with a right in land and a public authority which—
is entered into for the purpose of protecting, restoring or enhancing the natural environment, or natural resources, of land or water, and
in practice requires the land to be used and managed in a way that would (apart from this section) prevent it from being agricultural property occupied for the purposes of agriculture;
“land” includes pasture and woodland;
“public authority” means a person that is in entering the environmental management agreement—
exercising public functions, or
acting under arrangements with a public authority in relation to the exercise of the authority’s functions.
(7) This section does not apply in respect of an environmental management agreement that ended before 6 March 2024.
(1) This section applies for the purpose of determining the amount of the 100% relief allowance available in relation to a chargeable transfer that is not an occasion on which tax is chargeable under Chapter 3 of Part 3 for the purposes of—
(a) section 104(1A) (business property relief), and
(b) section 116(1A) (agricultural property relief).
(2) The 100% relief allowance available in relation to a chargeable transfer (“the relevant transfer”) is equal to—
(a) £2.5 million, less
(b) the total amount by which the values transferred by chargeable transfers made by the transferor in the allowance period were treated as reduced as a result of section 104(1A) or 116(1A).
(3) The allowance period means the period—
(a) beginning with the commencement of the period of seven years ending with the day on which the relevant transfer was made, and
(b) ending—
(i) where the relevant transfer is the transfer made under section 4, immediately before that transfer is deemed to have occurred, or
(ii) otherwise, with the day before the relevant transfer was made.
(4) But where—
(a) more than one conditionally relievable transfer in relation to the transferor occurs on the same day, and
(b) the sum of the potentially relievable values of those transfers exceeds the amount of the 100% relief allowance that would have been available in relation to a transfer made on that same day, if no other transfer had occurred on that day,
the 100% relief allowance available in relation to those transfers is to be determined under subsection (5) (instead of under subsection (2)).
(5) The 100% relief allowance available in relation to each of those transfers is the amount given by multiplying—
(a) the amount given by dividing the potentially relievable value of that transfer by the sum of the potentially relievable values of all of those transfers, by
(b) the amount of the 100% relief allowance that would have been available in relation to a transfer made on that same day, if no other transfer had occurred on that day.
(6) Subsection (7) applies where—
(a) the relevant transfer is the transfer made under section 4 (so far as it is a chargeable transfer), and
(b) the potentially relievable value of that transfer exceeds the amount of the 100% relief allowance available in relation to it.
(7) The 100% relief allowance available in relation to the relevant transfer is to be attributed between the properties transferred in proportion to the amount of the value of each property as is attributable to—
(a) the value of relevant business property that falls within section 105(1)(a), (b) or (bb),
(b) the agricultural value of agricultural property in relation to which the transferor’s interest condition in section 116(2) is met, or
(c) so much of the agricultural value of agricultural property in relation to which the transferor’s interest condition in section 116(2) is treated as met as a result of section 116(4) as does not exceed the amount which would have attracted relief under Schedule 8 to the Finance Act 1975.
(8) Subsection (9) applies where section 131(2) (relief where value of transferred property subsequently decreases) applies in relation to a chargeable transfer—
(a) made by the transferor in the allowance period, and
(b) the value of which is treated as reduced as a result of section 104(1A) or 116(1A).
(9) Subsection (2)(b) applies as if the amount by which that value is treated as reduced under section 104(1A) or 116(1A) is the amount by which it would have been treated as reduced if section 131(2) did not apply.
(10) For the purposes of this section—
(a) a chargeable transfer is a “conditionally relievable transfer” in relation to a transferor if—
(i) it was made by the transferor,
(ii) it is not the transfer made under section 4, and
(iii) section 104(1A) or 116(1A) would apply to reduce the value transferred if there were an amount of the 100% relief allowance available in relation to it, and
(b) the potentially relievable value of a chargeable transfer is so much of the value transferred as would be treated as reduced as a result of section 104(1A) or 116(1A) if the 100% relief allowance available in relation to it were unlimited.