SVM112160 | IHT Agricultural Property Relief: Additional Conditions - Replacement Provisions

Replacement shares. - section 124A(6)(a) IHTA 1984

The additional conditions are relaxed if the shares owned by the transferee immediately before the death of the transferor (or the death of the transferee, if earlier):

• were received by the transferee as a result of a reorganisation of share capital or a take-over bid and

• would under any of the provisions of sections 126-136 Taxation of Chargeable Gains Act (TCGA) 1992, be identified with the shares (or part of them) received by the transferee under the transfer.

When section 124A(6)(a) IHTA 1984 applies the transferee is treated as owning the original shares throughout.

Other Replacement Property

Where shares owned by the transferee immediately before the death were issued as consideration for agricultural property to which section 116 IHTA 1984 applied in relation to the chargeable transfer, the transferee’s ownership of the agricultural property is treated as including his period of ownership of the shares.

The main replacement provisions for agricultural land are discussed in the Inheritance Tax manual at IHTM24110 onwards.

Section 124B IHTA 1984 not applicable

These provisions do not apply where the original shares or securities are subsequently replaced. It is implicit in the references to ownership and occupation for agricultural purposes in sections 124B(3)(b) or (c) IHTA 1984 that the original property and any property replacing it have to be agricultural property as such. The replacement property has to be agricultural property immediately before the death, section 124B(3)(d) refers.

Additional Guidance: SVM150000