IHTM26102 | Step 3 - interaction: situations where interaction applies

Interaction under IHTA84/S39A applies only to transfers on or after 18 March 1986

• where the value transferred is reduced by business relief (IHTM25131) or agricultural relief (IHTM24001), and

• only for the purpose of valuing specific (IHTM26011) and residuary gifts (IHTM12082) under IHTA84/S38 and IHTA84/S39.

You must not apply the rules in any other situation or for any other purpose.

Broadly the rules of IHTA84/S39A are that

• you value specific gifts of relievable property at their value after relief

• you reduce other specific gifts by a proportion of the relief on any other relievable property, whether the gifts are chargeable or exempt, pecuniary or of assets (such as the residence or chattels)

• if the gift has to be grossed up (IHTM26003), you must gross up the reduced value under IHTA84/S39A

If the estate includes heritage property which has been given conditional exemption under IHTA84/S30, you should refer the case to Technical. You should send the case with a note showing your calculation of the tax. If final figures are not available, use estimates for illustration.