Legislation – Finance Act 2026
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Finance Act 2026, Schedule 12 is up to date with all changes known to be in force on or before 16 April 2026. There are changes that may be brought into force at a future date. Changes that have been made appear in the content and are referenced with annotations.
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Schedule 12Reform of reliefs for business property and agricultural property
Part 1Business property relief and agricultural property relief
Introduction
1
IHTA 1984 is amended as follows.
Business property
2
(1)
Section 104 (business property relief) is amended as follows.
(2)
In subsection (1)—
(a)
in the words before paragraph (a), after “reduced” insert “by 50%.”
, and
(b)
omit paragraphs (a) and (b) and the words after paragraph (b).
(3)
“(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)
is to be treated (instead) as reduced by 100%.
(1C)
Subsections (1) to (1B) are subject to the following provisions of this Chapter.”
Agricultural property
3
(1)
Section 116 (agricultural property relief) is amended as follows.
(2)
In subsection (1), for the words from “the appropriate” to the end substitute “50%”
.
(3)
“(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)
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.”
(4)
In subsection (2)—
(a)
in the words before paragraph (a), for “The appropriate percentage is 100 per cent.” substitute “For the purposes of subsections (1A) and (1B), the transferor’s interest condition is met”
, and
(b)
omit the words after paragraph (c).
(5)
In subsection (4)—
(a)
for “appropriate percentage would be 100 per cent.” substitute “transferor’s interest condition would be met”
, and
(b)
“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”
100% relief allowance
4
“Chapter 2A100% Relief allowance and 100% trust relief allowance
124D100% relief allowance
(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
(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
(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
124ETransfer of unused 100% relief allowance
(1)
This section applies where—
(a)
immediately before the death of a person (a “deceased person”), the deceased person had a spouse or civil partner (“the survivor”), and
(b)
an amount of the 100% relief allowance of the deceased person is unused on death.
(2)
A person has an amount of unused 100% relief allowance on death if the total 100% relieved amount is less than the deceased person’s final allowance amount.
(3)
Accordingly, the “unused 100% relief allowance” in relation to the person is the difference between those amounts.
(4)
In this section—
(a)
(b)
the “final allowance amount” in relation to a person means the amount specified in section 124D(2)(a) that has effect on the day on which the person dies.
(5)
Where a claim is made under this section, the survivor’s final allowance amount, for the purposes of the charge to tax on the death of the survivor, is increased by the lesser of the amount of the survivor’s final allowance amount and—
(a)
the amount given by multiplying the survivor’s final allowance amount by the unused percentage of the deceased person, or
(b)
where the survivor is the survivor in relation to more than one deceased person, the amount given by multiplying the survivor’s final allowance amount by the sum of the unused percentages of those deceased persons.
(6)
The unused percentage of the deceased person means the percentage given by dividing—
(a)
the unused 100% relief allowance in relation to the deceased person, by
(b)
the deceased person’s final allowance amount.
124FClaims under section 124E
(1)
A claim under section 124E may be made—
(a)
by the personal representatives of the survivor within the permitted period, or
(b)
(if no claim is so made) by any other person liable to the tax chargeable on the survivor’s death within such later period as an officer of Revenue and Customs may in the particular case allow.
(2)
If no claim under section 124E above has been made in relation to a person (P) by reference to whose death that section applies in relation to the survivor, the claim under that section in relation to the survivor may include a claim under that section in relation to P if that does not affect the tax chargeable on the value transferred by the chargeable transfer of value made on P’s death.
(3)
(a)
the period of four years from the end of the month in which the survivor dies or (if it ends later) the period of six months beginning with the date on which the personal representatives first act as such, or
(b)
such longer period as an officer of Revenue and Customs may in the particular case allow.
(4)
100% trust relief allowance
5
“124G100% trust relief allowance (relevant property)
(1)
This section applies for the purpose of determining the amount of the 100% trust relief allowance available in relation to an occasion on which tax is charged under section 64 or 65 in relation to a settlement (“the relevant settlement”) for the purposes of—
(a)
section 104(1B) (business property relief), and
(b)
section 116(1B) (agricultural property relief).
(2)
The 100% trust relief allowance available in relation to an occasion on which tax is charged under section 64 or 65 (“the relevant occasion”) in relation to the relevant settlement is equal to—
(3)
The allowance period means the period—
(a)
beginning with—
(i)
the first day of the second quarter in the period beginning with the date of the most recent ten-year anniversary (within the meaning of Chapter 3 of Part 3) of the relevant settlement, or
(ii)
if there has not yet been a ten-year anniversary of the relevant settlement, the first day of the second quarter in the period beginning with the date on which the settlement commenced, and
(b)
ending with the day before the relevant occasion occurred.
(4)
But where—
(a)
more than one conditionally relievable occasion occurs on the same day, and
(b)
the sum of the potentially relievable values in relation to those occasions exceeds the amount of the 100% trust relief allowance that would have been available in relation to a conditionally relievable occasion occurring on that same day, if no other such occasion had occurred on that day,
the 100% trust relief allowance available in relation to those occasions is to be determined under subsection (5) (instead of under subsection (2)).
(5)
The 100% trust relief allowance available in relation to each of those occasions is the amount given by multiplying—
(a)
the amount given by dividing the potentially relievable value in relation to that occasion by the sum of the potentially relievable values in relation to each of those occasions, by
(b)
the amount of the 100% trust relief allowance that would have been available in relation to a conditionally relievable occasion occurring on that same day, if no other such occasion had occurred on that day.
(6)
For the purposes of this section—
(a)
a “conditionally relievable occasion” means an occasion on which—
(i)
tax is charged under section 64 or 65 in relation to the relevant settlement, and
(b)
the potentially relievable value, in relation to an occasion on which tax is charged under section 64 or 65, is so much of the value as otherwise would have been charged on that occasion as would be treated as reduced as a result of section 104(1B) or 116(1B) if the 100% trust relief allowance available in relation to it were unlimited.
124HTrust maximum allowance
(1)
The trust maximum allowance for an occasion on which tax is chargeable under section 64 or 65 in relation to a settlement (“the relevant settlement”), other than a qualifying pre-commencement settlement (within the meaning of section 124I), is the sum of transferred allowance amounts the relevant settlement has acquired.
(2)
The relevant settlement acquires a transferred allowance amount if—
(a)
there is a chargeable transfer of qualifying relievable property that results in the property becoming comprised in the relevant settlement, or
(b)
tax is charged as if there was a transfer of value of qualifying relievable property comprised in the relevant settlement as a result of section 4(1) (transfers on death) or section 52(1) (charge on termination of interest in possession).
(3)
The transferred allowance amount in relation to a transfer (or deemed transfer) is equal to so much of the value of the qualifying relievable property as does not exceed the maximum allowance cap in relation to it (and if the cap is nil or less, no transferred allowance amount is acquired).
(4)
The maximum allowance cap in relation to qualifying relievable property is equal to—
(a)
£2.5 million, less
(b)
the sum of transferred allowance amounts previously acquired by—
(i)
the relevant settlement, or
(ii)
any other settlement made by the settlor of the relevant settlement.
(5)
But where more than one transfer referred to in subsection (2)(a) or (b), occurs (or is deemed to occur for the purpose of charging tax) on the same day, the maximum allowance cap is allocated between the qualifying relievable property that is the subject of each transfer in proportion to their value.
(6)
Property is qualifying relievable property to the extent that on its transfer (or deemed transfer)—
(a)
it becomes relevant property, and
(7)
(8)
The determination of whether property is qualifying relievable property, and its value, is to be made as it would be made at the time of the transfer (and accordingly ignoring the occurrence of any subsequent events).
(9)
In this section and in section 124I “relevant property” has the meaning it has in Chapter 3 of Part 3 (see section 58).
124ITrust maximum allowance (qualifying pre-commencement settlements)
(1)
The trust maximum allowance for an occasion on which tax is chargeable under section 64 or 65 in relation to a qualifying pre-commencement settlement is £2.5 million.
(2)
A settlement is a qualifying pre-commencement settlement if—
(a)
the settlement commenced before 30 October 2024, and
(b)
had there been an occasion on which tax is chargeable under Chapter 3 of Part 3 (apart from section 79), immediately before that date in relation to all of the property comprised in the settlement, at least some of the amount on which tax would then be chargeable would be treated as reduced as a result of subsection (1B) of section 104 or 116 if—
(i)
the amendments made to those sections by paragraphs 2, 3 and 12 of Schedule 12 to the Finance Act 2026 had been in force,
(ii)
sections 106, 117 and 123 (minimum periods of ownership or occupation) were ignored,
(iii)
all of the property had been relevant property, and
(iv)
there were an amount of the 100% trust relief allowance available in relation to it.
(3)
The condition in subsection (2)(b) is to be treated as met if—
(a)
some or all of the property comprised in the settlement is agricultural property let on a tenancy beginning before 1st September 1995,
(b)
the transferor’s interest condition in section 116(2) was not met in relation to that property immediately before 30 October 2024, and
(c)
the condition in subsection (2)(b) of this section would have been met if the transferor’s interest condition had been met in relation to that property at that time.
124J100% trust relief allowance (special trusts)
(1)
This section applies for the purpose of determining the amount of the 100% trust relief allowance available in relation to an occasion on which tax is charged under a special trust charging provision for the purposes of—
(a)
section 104(1B) (business property relief), and
(b)
section 116(1B) (agricultural property relief).
(2)
The 100% trust relief allowance available in relation to an occasion on which tax is charged under a special trust charging provision (“the relevant occasion”) in relation to a settlement (“the relevant settlement”) is equal to—
(a)
£2.5 million, less,
(3)
But where—
(a)
more than one conditionally relievable occasion in relation to the relevant settlement and that special trust charging provision occurs on the same day, and
(b)
the sum of the potentially relievable values in relation to those occasions exceeds the amount of the 100% trust relief allowance that would have been available in relation to a conditionally relievable occasion occurring on that same day, if no other such occasion had occurred on that day,
the 100% trust relief allowance available in relation to those occasions is to be determined under subsection (4) (instead of under subsection (2)).
(4)
The 100% trust relief allowance available in relation to each of those occasions is the amount given by multiplying—
(a)
the amount given by dividing the potentially relievable value in relation to that occasion by the sum of the potentially relievable values in relation to each of those occasions, by
(b)
the amount of the 100% trust relief allowance that would have been available in relation to a conditionally relievable occasion occurring on that same day, if no other such occasion had occurred on that day.
(5)
For the purposes of this section—
(a)
a “conditionally relievable occasion”, in relation to the relevant settlement and a special trust charging provision, means an occasion—
(i)
on which tax is charged under that provision, and
(b)
the potentially relievable value, in relation to an occasion on which tax is charged under a special trust charging provision, is so much of the value as otherwise would have been charged on that occasion as would be treated as reduced as a result of section 104(1B) or 116(1B) if the 100% trust relief allowance available in relation to it were unlimited, and
(c)
a special trust charging provision means—
(i)
section 70 (property leaving temporary charitable trusts),
(ii)
section 71 (accumulation and maintenance trusts),
(iii)
section 71B (trusts for bereaved minors),
(iv)
section 72 (property leaving employee trusts and newspaper trusts),
(v)
section 73 (pre-1978 protective trusts),
(vi)
section 74 (pre-1981 trusts for disabled persons), or
(vii)
paragraph 8 of Schedule 4 (maintenance funds for historic buildings).
124K100% trust relief allowance (age 18-to-25 trusts)
(1)
This section applies for the purpose of determining the amount of the 100% trust relief allowance available in relation to an occasion on which tax is charged under section 71E(1)(a) (charge on age 18-to-25 trusts) in relation to a settlement (“the relevant settlement”) and a beneficiary of that settlement (“B”) for the purposes of—
(a)
section 104(1B) (business property relief), and
(b)
section 116(1B) (agricultural property relief).
(2)
There is no 100% trust relief allowance available in relation to an occasion on which tax is charged under section 71E(1)(b).
(3)
The 100% trust relief allowance available in relation to an occasion on which tax is charged under section 71E(1)(a) (“the relevant occasion”) in relation to the relevant settlement and B is equal to—
(a)
the 18-25 trust allowance in relation to the relevant settlement and B, less,
(4)
The 18-to-25 trust allowance in relation to the relevant settlement and B is—
(a)
where there is only one qualifying settlement, £2.5 million, or
(b)
where there is more than one qualifying settlement, £2.5 million divided by the number of qualifying settlements.
(5)
For the purposes of subsection (4), a settlement is a qualifying settlement—
(a)
if it is the relevant settlement, or
(b)
where the relevant settlement was made by a parent of B on their death on or after 30 October 2024, if it is another settlement—
(i)
of which B is a beneficiary,
(ii)
to which section 71D applies, and
(iii)
that was made by the same parent of B on their death.
(6)
But where—
(a)
more than one conditionally relievable occasion in relation to the relevant settlement and B occurs on the same day, and
(b)
the sum of the potentially relievable values in relation to those occasions exceeds the amount of the 100% trust relief allowance that would have been available in relation to a conditionally relievable occasion occurring on that same day, if no other such occasion had occurred on that day,
the 100% trust relief allowance available in relation to those occasions is to be determined under subsection (7) (instead of under subsection (3)).
(7)
The 100% trust relief allowance available in relation to each of those occasions is the amount given by multiplying—
(a)
the amount given by dividing the potentially relievable value in relation to that occasion by the sum of the potentially relievable values in relation to each of those occasions, by
(b)
the amount of the 100% trust relief allowance that would have been available in relation to a conditionally relievable occasion occurring on that same day, if no other such occasion had occurred on that day.
(8)
For the purposes of this section—
(a)
a “conditionally relievable occasion”, in relation to the relevant settlement and B, means an occasion—
(i)
on which tax is charged under section 71E(1)(a) (charge on age 18-to-25 trusts) in relation to the settlement and B, and
(b)
the potentially relievable value, in relation to an occasion on which tax is charged under section 71E(1)(a) in relation to the relevant settlement and B, is so much of the value as otherwise would have been charged on that occasion as would be treated as reduced as a result of section 104(1B) or 116(1B) if the 100% trust relief allowance available in relation to it were unlimited, and
(c)
“parent” has the meaning given by section 71H.”
Indexation of relief allowances
6
(1)
“124LIndexation of allowance amounts
(1)
If the consumer prices index for the month of September in any year is higher than it was for the previous September, then each relief allowance amount applies to chargeable transfers made on or after 6th April in the following year as if—
(a)
increased by the percentage that is the same as the percentage by which the consumer prices index is higher than it was for the previous September, and
(b)
rounded up to the nearest amount which is a multiple of £1000 (where it would not otherwise be).
(2)
The Treasury must before 6th April 2031 and each subsequent 6th April make an order by statutory instrument amending each relief allowance amount to achieve the result in subsection (1).
(3)
In this section—
“consumer prices index” means the all items consumer prices index published by the Statistics Board;
“relief allowance amount” means an amount (for the time being) specified in any of the following provisions—
(a)
section 124D(2)(a) (100% relief allowance);
(b)
subsection (4)(a) of section 124H (100% trust relief allowance cap);
(c)
section 124I(1) (100% trust relief allowance: qualifying pre-commencement settlements);
(d)
section 124J(2)(a) (100% trust relief allowance: special trusts);
(e)
section 124K(4) (100% trust relief allowance: age 18-to-25 trusts).”
(2)
The amendment made by sub-paragraph (1) comes into force on 6 April 2030 (and accordingly no relief allowance amount is to be increased by virtue of it before 6 April 2031).
100% relief allowance where relief prevented by section 113A(2) or 124A(2)
7
(1)
“(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.”
(2)
“(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.”
Application of section 131 relief
8
(1)
Section 131 is amended as follows.
(2)
In subsection (2), in the words after paragraph (b), for “were reduced by the amount of the excess” substitute “reflected the market value of the transferred property on the relevant date, rather than its market value at the time of the chargeable transfer”
.
(3)
Omit subsection (2A).
Rate between ten-year anniversaries
9
(1)
Section 69 is amended as follows.
(2)
“would have been last charged under section 64 if the following were disregarded—
(a)
section 66(2) (reduction of rate where value attributable to property that is not comprised in the settlement or is not relevant property), and
(b)
Chapters 1 to 2A of Part 5 (business property relief and agricultural property relief).”
(3)
In subsection (2A), for “above (apart from section 66(2) above)” substitute “, disregarding section 66(2) and Chapters 1 to 2A of Part 5,”
.
Property moving between settlements
10
“(1A)
Subsection (1) applies for the purposes of Chapters 1 to 2A of Part 5 as it applies for the purposes of this Chapter.”
Scottish agricultural leases
11
(1)
Section 177 (Scottish agricultural leases) is amended as follows.
(2)
“—
(a)
tacit relocation (or any provision in the lease having the same effect as tacit relocation),
(b)
(c)
continuation by virtue of a specified enactment.”.
(3)
(4)
“(5)
The Treasury may by regulations make provision about relevant interests, corresponding to the provision made by this section in relation to the interest of a tenant in a lease of agricultural property in Scotland.
(6)
For the purposes of subsection (5), a “relevant interest” is the interest of a tenant in a specified type of lease or tenancy of agricultural property in Scotland forming part of the value of a person’s estate immediately before that person’s death.
(7)
Regulations under subsection (5) must specify the value which is to be left out of account for the purposes of determining the value of a person’s estate or, as the case may be, part of a person’s estate.
(8)
Regulations under this section are to be made by statutory instrument.
(9)
Regulations under this section may make such amendments or repeals of this section as appear to the Treasury to be expedient in consequence of provision made by virtue of subsections (1)(c), (2)(a)(iii) or (5).
(10)
Regulations under subsections (1)(c), (2)(a)(iii) or (5) may have effect in relation to deaths occurring before the regulations are made.
(11)
A statutory instrument containing regulations made under this section is subject to annulment in pursuance of a resolution of the House of Commons.
(12)
In this section—
“agricultural property” has the same meaning as in Chapter 2 of Part 5,
“enactment” includes an enactment contained in or made under an Act of the Scottish Parliament,
“specified” means specified by regulations made by the Treasury.”.
Certain shares no longer eligible for 100% relief
12
(1)
In section 105 (relevant business property), in subsection (1)—
(a)
“(aa)
any unquoted shares that are traded on a recognised stock exchange;
(ab)
any unquoted securities of a company that are traded on a recognised stock exchange;”,
(b)
in paragraph (ab) (as inserted by this sub-paragraph)—
(i)
the words from “that” to the end become sub-paragraph (i), and
(ii)
“, 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;”,
(c)
“(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;”,
(d)
in paragraph (b), at the beginning insert “any other”
, and
(e)
in paragraph (bb), after “any” insert “other”
.
(2)
In section 107, in subsection (4) for “105(1)(bb)” substitute “105(1)(aa) or (bb)”
.
(3)
In that subsection (as amended by sub-paragraph (2)) after “105(1)(aa)”, insert “, (ac)”
.
(4)
In section 113A, in subsection (3A)(b), for “paragraph (b) or” substitute “any of paragraphs (aa) to”
.
(5)
(a)
in section 178 (sale of shares from deceased’s estate), in subsection (2)—
(i)
omit “or dealing on the Unlisted Securities Market”, and
(ii)
omit “or dealt in”,
(b)
in section 180 (effect of purchasing qualifying investments), in subsection (3) omit “or separately dealt in on the Unlisted Securities Market”, and
(c)
in section 186B (suspended investments), in subsection (1) omit “or dealing on the Unlisted Securities Market”.
(6)
In section 272(1)—
(a)
in the definition of “quoted”—
(i)
omit “or dealt in on the Unlisted Securities Market”, and
(ii)
for “neither so listed nor so dealt in” substitute “not so listed”
, and
(b)
““recognised stock exchange” has the meaning it has in the Income Tax Acts (see subsection (1) of section 1005 of the Income Tax Act 2007), and subsection (3) of that section (meaning of “listed” on a recognised stock exchange) applies for the purposes of this Act as it applies for the purposes of the Income Tax Acts;”.
(7)
In consequence of the amendments made by sub-paragraph (1), in Schedule 20 to FA 1986, in paragraph 8(1A)(a), for “paragraph (b), (bb) or” substitute “any of paragraphs (aa) to”
.
Instalments and interest
13
(1)
In section 227 (payment by instalments), in subsection (2)—
(a)
“(aa)
property that is relevant business property for the purposes of Chapter 1 of Part 5;”, and
(b)
in paragraph (b), after “applies” insert “and that are not relevant business property for the purposes of that Chapter”
.
(2)
In section 234 (interest on instalments)—
(a)
“—
(i)
value treated as reduced under Chapter 1 or 2 of Part 5 of this Act, or
(ii)
the value of any shares, securities, business or interest in a business, if that value is not treated as reduced under either Chapter of that Part, or”, and
(b)
in subsection (2), for “(not being tax attributable to value treated as reduced under Chapter II of Part V of this Act)” substitute “that is not tax attributable to value treated as reduced under Chapter 1 or 2 of Part 5 of this Act”
.
Certificates of discharge
14
Temporary relaxation of ownership and occupation conditions
15
(1)
This paragraph applies where—
(a)
property becomes comprised in a settlement as a result of a transfer of value made on or after 30 October 2024 but before 6 April 2026,
(b)
some or all of the value transferred was reduced by 100% as a result of section 104 or section 116 of IHTA 1984,
(c)
an occasion on which tax is chargeable under section 65 of that Act occurs as a result of the property ceasing to be comprised in that settlement before 6 April 2026, and
(d)
some or all of the amount on which tax is charged would have been reduced by 100% as a result of section 104 or section 116 of that Act, but was not only as a result of an ownership or occupation condition.
(2)
For the purposes of that occasion, Chapters 1 and 2 of Part 5 of IHTA 1984 have effect as if the ownership or occupation conditions were omitted.
(3)
Where this paragraph applies the transfer of value mentioned in sub-paragraph (1)(a) is not to be regarded as a chargeable transfer of qualifying relievable property for the purposes of section 124H of IHTA 1984 (as inserted by paragraph 5).
(4)
In this paragraph, an “ownership or occupation condition” means—
(a)
section 106 of IHTA 1984 (minimum period of ownership for business property relief);
(b)
section 117 or 123 of that Act (minimum period of occupation or ownership for agricultural property relief).
(5)
Application of section 124E in cases where the deceased dies before 6 April 2026
16
For the purposes of applying section 124E in relation to a deceased person who died before 6 April 2026—
(a)
the person is to be treated as having an amount of unused 100% relief allowance on death, and
(b)
the unused percentage in relation to that person is to be treated as 100%.
Commencement
17
(1)
The amendments made by this Part of this Schedule, other than the amendment made by paragraph 6 and the modifications made by paragraph 15, have effect in relation to transfers of value made, and occasions on which tax is chargeable under Chapter 3 of Part 3 of IHTA 1984, on or after 6 April 2026.
(2)
Sub-paragraph (3) applies where—
(a)
a potentially exempt transfer, or a chargeable transfer, is made after 29 October 2024 but before 6 April 2026, and
(b)
the transferor dies on or after 6 April 2026, and
(c)
that death is within seven years of the transfer.
(3)
The amendments made by this Part of this Schedule, other than the amendments made by sub-paragraphs (1)(b) and (c) and (3) of paragraph 12, are to be treated as having had effect at the time the transfer was made for the purposes of determining the amount of tax, or additional tax, that falls to be calculated in respect of the transfer.
(4)
During the period beginning on the date of the transfer and ending immediately before—
(a)
the seventh anniversary of that date, or
(b)
if it is earlier, the death of the transferor,
it is to be assumed for the purposes of this Act that sub-paragraph (3) will not apply.
(5)
For the purpose of determining the trust maximum allowance under section 124H of IHTA 1984 (as inserted by paragraph 5)—
(a)
the amendment made by that paragraph is to be treated as if it had come into force on 30 October 2024, and
(6)
Where property is comprised in a qualifying pre-commencement settlement before 30 October 2024, the amendments made by paragraphs 2 to 5 of this Schedule do not have effect in relation to that property, at any time while that property is relevant property, until the first ten-year anniversary that falls on or after 6 April 2026.
(7)
For the purposes of section 66(2) of IHTA 1984 as it applies in connection with the first occurrence on or after 6 April 2026 of the charge under section 64(1) of that Act in relation to a settlement, previously relievable property is to be treated as if it were not comprised in the settlement until 6 April 2026.
(8)
For the purposes of sub-paragraph (7) “previously relievable property” means relevant property comprised in the settlement before 6 April 2026 to the extent the value of that property charged on the occasion of that charge would have been treated as reduced by 100% as a result of section 104(1)(a) or 116(2) of IHTA 1984 if the amendments made by this Part of this Schedule had not been made.
(9)
Sub-paragraph (10) applies for the purposes of—
(a)
section 70(7) of IHTA 1984 as it applies in connection with a charge under a special trust charging provision occurring on or after 6 April 2026 in relation to a settlement that commenced before that date, and
(b)
sections 71F(6) and 71G(3) of that Act as they apply in connection with a charge under section 71E(1)(a) of that Act occurring on or after 6 April 2026 in relation to a settlement that commenced before that date.
(10)
Previously relievable special property is to be treated as if it were excluded property for the purposes of those sections until—
(a)
in the case of previously relievable special property in relation to a charge under a special trust charging provision, the commencement of the first successive quarter in the relevant period (within the meaning given by section 70(8) of IHTA 1984) to commence on or after 6 April 2026, or
(b)
in the case of previously relievable special property in relation to a charge under section 71E(1)(a) of that Act, the commencement of the first successive quarter in the qualifying period to commence on or after 6 April 2026.
(11)
The “qualifying period” in relation to a charge under section 71E(1)(a) of IHTA 1984 means—
(a)
in a case where the tax falls to be calculated in accordance with section 71F of that Act, the period referred to in subsection (5) of that Act, or
(b)
otherwise, the relevant period (within the meaning given by section 70(8) of that Act as applied by section 71G(3) of that Act).
(12)
For the purposes of sub-paragraph (10) “previously relievable special property”, in relation to a charge under a special trust charging provision or under section 71E(1)(a) of IHTA 1984, means property comprised in the settlement before 6 April 2026 to the extent the value of that property charged on the occasion of that charge would have been treated as reduced by 100% as a result of section 104(1)(a) or 116(2) of that Act if the amendments made by this Part of this Schedule had not been made.
(13)
But property ceases to be previously relievable special property after the first occasion on or after 6 April 2026 of a charge under a special trust charging provision or under section 71E(1)(a) of that Act in relation to that property.
Part 2Inheritance tax on overseas property with value attributable to UK agricultural property
Amendment of Schedule A1
18
(1)
Schedule A1 to IHTA 1984 is amended as follows.
(2)
In the heading of Part 1 of that Schedule, after “property”, in the second place it occurs, insert “or UK agricultural property”
.
(3)
In the following provisions, for “a UK residential property interest” substitute “relevant UK property”
—
(4)
In that paragraph, in sub-paragraphs (4) and (5), for “UK residential property interest” substitute “relevant UK property”
.
(5)
“Relevant UK property
7A
In this Schedule “relevant UK property” means—
(a)
UK agricultural property, or
(b)
a UK residential property interest.
UK agricultural property
7B
(1)
In this Schedule “UK agricultural property” means agricultural land or pasture in the United Kingdom and includes—
(a)
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
(b)
cottages, farm buildings and farmhouses, together with the land occupied with them.
(2)
For the purposes of sub-paragraph (1), 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.”
Consequential amendments
19
(1)
IHTA 1984 is amended as follows.
(2)
In section 48ZA (excluded property: situated outside the UK etc), in subsection (10), after “property”, in the second place it occurs, insert “or UK agricultural property”
.
(3)
In section 53 (exceptions from charge under section 52), in subsection (4A)(d)(i), after “property”, in the third place it occurs, insert “or UK agricultural property”
.
(4)
In section 54 (exceptions from charge on death), in subsection (2C)(e)(i), after “property”, in the third place it occurs, insert “or UK agricultural property”
.
(5)
In section 237 (imposition of charge), in subsection (2A), for “UK residential property interest” substitute “relevant UK property”
.
(6)
In section 102 of FA 1986 (gifts with reservation), in subsection (7A)(d)(i), after “property”, in the third place it occurs, insert “or UK agricultural property”
.
Commencement
20
(1)
The amendments made by this Part of this Schedule have effect in relation to times on or after 6 April 2026.
(2)
But for the purposes of paragraph 5(1) of Schedule A1 to IHTA 1984—
(a)
paragraph (a) of that paragraph does not apply in relation to a disposal of property—
(i)
to which paragraph 2 or 3(a) of that Schedule only applies as a result of the amendments made by this Part of this Schedule, and
(ii)
that occurs before 6 April 2026, and
(b)
paragraph (b) of that paragraph does not apply in relation to a payment of money or money’s worth—
(i)
in relation to a relevant loan that is only a relevant loan as a result of the amendments made by this Part of this Schedule, and
(ii)
that occurs before 6 April 2026.