SolvedIHTM24255 | Other issues: Form IHT414
From HM Revenue & Customs · Inheritance Tax Manual
Form IHT414 is one of the Schedules to form IHT400 and provides information to support the deduction of agricultural relief on death. (The Form D37 is for use with lifetime transfers other than those to which questions 17 to 20 on the Form IHT414 refer) The form is designed to obtain the information you need to establish whether agricultural relief is available in straightforward cases. The information it contains may also point to areas where further enquiries will be necessary.
Question 1
Identifies the property on which the relief is deducted. You should look at the description of the property and make sure that it agrees with any plan and professional valuation that may have been sent. Might you need separate completed forms for different elements of the property? Can you clearly identify all parts of the property concerned on the plan and valuation?
You will need a plan of the land before the papers can be sent to the District Valuer (IHTM24160)
Question 2
Asks when and in what circumstances the property was acquired. The date of acquisition should allow you to decide whether the ownership requirement in s.117 IHTA 1984 (IHTM24101) is satisfied. Where property has been acquired by gift or inheritance it may be that it has been the subject of a previous chargeable event for IHT purposes on which the availability of relief was considered. If so you should obtain any related files held by the office.
Question 3
Agricultural relief is not normally available for property that is subject to a binding contract for sale at the date of death (IHTM24040). The answer to this question should enable you to identify any land concerned and where appropriate restrict relief accordingly.
Question 4
A successful application for planning permission in respect of agricultural property may be an indicator of a market value in excess of an agricultural value. Whether any excess value qualifies for business relief, and if so at what rate, will depend on the circumstances of each case. Where the consent relates to such things as the conversion of an existing agricultural building to residential use, the removal of an agricultural occupancy restriction or to the change of use of agricultural land it may be appropriate to establish to what extent the subject property was actually being used for agricultural purposes immediately before the death.
Question 5
This question is designed to elicit some fairly precise details of the nature and extent of the farming activity taking place. You should not accept very brief, ambiguous answers such as ‘general farming’ unless detailed information relating to the agricultural operations is available elsewhere on the file for example. a professional valuation or business accounts may contain details of crops grown or animals grazed. In general arable or pastoral (livestock) farming is regarded as agriculture, but there are other activities where the position is much less certain. The IHT400 Notes asks that details of the type of crops grown or the type and approximate number of livestock grazed be given and you should ensure that this information has been provided as a bare minimum.
Question 6
Focuses exclusively on the involvement of deceased in the farming activities described in answer to question 5. Recent Special Commissioner, Tax Tribunal and High Court decisions have highlighted the importance of determining the exact role played by the deceased in deciding whether any farmhouse or cottage in which the deceased lived was occupied for the purposes of agriculture. At one end of the spectrum will be full time working farmers where the availability of relief will not be in doubt. At the other end is the retired or lifestyle farmer whose day to day involvement may be negligible or non-existent.
Questions 7 - 11
How land is occupied determines the rate of relief. The answer to these questions should provide information to determine the rate of relief that applies in cases that involve tenancies created before 1 September 1995 (IHTM24240). From 6 April 2026, where the higher rate of 100% is due, this will be limited to a maximum of £2.5m, or up to £5m where unused 100% allowance can be transferred from a pre-deceased spouse or civil partner (IHTM25500).
In addition, there was a major change in the structure of the relief in 1981. So that people who had organised their affairs to meet the requirements of the earlier relief would not be disadvantaged, transitional provisions were enacted. Where these apply, relief at the higher rate is preserved (IHTM24145). Where the answer to question 9 indicates that the letting started before 10 March 1981 and the 100% relief box has been ticked in answer to question 11 you will have to consider the application of these provisions.
The answer to these questions should also provide information to show how, in other circumstances, the higher rate of relief is due. If relief at 100% is claimed but the facts or other information suggest that a tenancy did exist and the land was occupied by the tenant prior to 1 September 1995, consider the guidance at IHTM24014.
Questions 12 - 15
The answer to these questions will indicate whether or not any farmhouse (IHTM24036) or cottages (IHTM24034) were occupied for the purposes of agriculture (IHTM24070). If the answer to question 13 indicates a farmhouse or cottage was unoccupied for anything more than a very brief period, the instructions at IHTM24076 dealing with the cases of Harrold and Atkinson should be considered.
Question 16
To qualify for relief, farm buildings must be used for agricultural purposes (IHTM24060). Buildings used for the storage of redundant or non-agricultural equipment are unlikely to qualify. You should give particular attention to cases where the agricultural land has been let (especially under short-term agreements or grazing licences,) as the farm buildings may be surplus to the requirements of the tenant, and in circumstances where farm buildings have been the subject of planning applications.
Questions 17 - 20
These questions will only be answered if agricultural relief is being deducted against a
Detailed instructions on the additional conditions for lifetime gifts of agricultural property begin at IHTM24172.