IHTM42165 - Relevant property: AR and BR

Chargeable value

In ascertaining the chargeable value of relevant property subject to a charge, you can deduct relevant business and agricultural reliefs

• Agricultural relief ( IHTM24001)
• Business relief ( IHTM25131)

Historic values for rate

However, when you are calculating the appropriate rate of tax using historic values, you must not deduct any AR or BR from those historic values.

Ten year anniversary (TYA)

You can deduct AR or BR from the current value of relevant property in the trust for both

• the current chargeable value and
• the value of cumulative proportionate charges in the previous 10 years.

All historic values must however remain at the value before AR/BR.

Proportionate charges: rate calculation

• For exit charges before the first TYA (S68), in calculating rate you must not deduct AR or BR from the value of the relevant property at set-up of the trust.
• For exit charges after a TYA (S69), you can continue to use the chargeable value of relevant property at the TYA net of AR or BR.

Period of ownership

You will always have to consider period of ownership. Normal requirements apply, but note carefully any periods of IIP entitlement.

Cases sometimes arise where relevant property may start as relevant property, be appointed to IIP trusts, but then later revert to being relevant property again. Although the trustees have legal ownership throughout, the beneficiary has the IIP have beneficial entitlement and so will be the ‘owner’ for the BR/AR ownership provisions.

For example, if business property reverted from IIP to discretionary trusts less than 2 years before a TYA, that property would not have been in the qualifying ownership of the trustees for the required 2 years and BR will not apply at the TYA.

Woodland relief

Woodland relief is not available for settled property. ( IHTM04374)