Finance Act 2024
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Further provisions relating to agricultural property | ||
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100. (1) The Principal Act is amended by the insertion of the following section after section 89: | ||
“Further provisions relating to agricultural property | ||
89A. (1) In this section— | ||
‘agricultural property’ means— | ||
(a) agricultural land, pasture and woodland situate in a Member State or in the United Kingdom and crops, trees and underwood growing on such land and also includes such farm buildings, farm houses and mansion houses (together with the lands occupied with such farm buildings, farm houses and mansion houses) as are of a character appropriate to the property, and farm machinery, livestock and bloodstock on such property, and | ||
(b) a payment entitlement (within the meaning of Regulation (EU) 2021/2115 of the European Parliament and of the Council of 2 December 202135 ); | ||
‘agricultural value’ means the market value of agricultural property reduced by 90 per cent of that value; | ||
‘beneficiary’ means a donee, a successor or a transferee referred to in section 32(2); | ||
‘relevant debts or encumbrances’ means any debt or encumbrance in respect of a dwelling-house that— | ||
(a) is the only or main residence of the beneficiary, and | ||
(b) is not agricultural property, | ||
other than a loan secured on the dwelling-house which is not used to purchase, repair or improve the dwelling-house; | ||
‘relevant qualification’ means a trained farmer qualification (within the meaning given by section 654A of the Taxes Consolidation Act 1997 ) or a qualification set out in Schedule 2 or 2A to the Stamp Duties Consolidation Act 1999 ; | ||
‘solar panel’ means ground-mounted equipment used to capture solar energy and convert it into electrical energy together with ancillary equipment used to harness, store and transfer the electrical energy. | ||
(2) Subject to this section, insofar as any gift or inheritance consists of agricultural property at the date of the gift or inheritance and at the valuation date, and— | ||
(a) both the disponer and the beneficiary are individuals, | ||
(b) for the period of not less than 6 years ending immediately prior to the date of the gift or inheritance— | ||
(i) the disponer was beneficially entitled in possession to the agricultural property concerned, and | ||
(ii) one of the conditions specified in subsection (5) was satisfied, | ||
(c) at the valuation date, not less than 80 per cent of the market value of the property to which the beneficiary is beneficially entitled in possession, after taking the gift or inheritance, is represented by the market value of agricultural property situated in a Member State or in the United Kingdom and, for these purposes— | ||
(i) no deduction is made from the market value of property for any debts or encumbrances other than relevant debts or encumbrances, and | ||
(ii) an individual is deemed to be beneficially entitled in possession to— | ||
(I) an interest in expectancy, notwithstanding the definition of ‘entitled in possession’ in section 2(1), and | ||
(II) property that is subject to a discretionary trust under or in consequence of a disposition made by the individual where the individual is an object (within the meaning of Chapter 2 of Part 3) of the trust, | ||
and | ||
(d) for the period of not less than 6 years commencing on the valuation date, the beneficiary satisfies one of the conditions specified in subsection (6), | ||
then, section 28 (other than subsection (7)(b) of that section) shall apply in relation to the agricultural property as it applies in relation to other property subject to the following modifications— | ||
(i) in subsection (1) of that section, the reference to market value shall be construed as a reference to agricultural value, | ||
(ii) where a deduction is to be made for any liability, costs or expenses in accordance with subsection (1) of that section only a proportion of such liability, costs or expenses is deducted and that proportion is the proportion that the agricultural value of the agricultural property bears to the market value of that property, and | ||
(iii) where a deduction is to be made for any consideration under subsection (2) or (4)(b) of that section, only a proportion of such consideration is deducted and that proportion is the proportion that the agricultural value of the agricultural property bears to the market value of that property. | ||
(3) For the purposes of subsection (2), if, in the administration of property subject to a disposition— | ||
(a) property is appropriated in or towards the satisfaction of a benefit in respect of which a person is deemed to take a gift or an inheritance under the disposition, and | ||
(b) the property so appropriated was subject to the disposition at the date of the gift or inheritance, | ||
then the property is deemed to have been comprised in that gift or inheritance at the date of the gift or inheritance. | ||
(4) For the purposes of subsection (2)(b)(i)— | ||
(a) an individual is deemed to be beneficially entitled in possession to agricultural property that is subject to a discretionary trust under or in consequence of a disposition made by the individual, and | ||
(b) where, prior to the date of the gift or inheritance, the disponer— | ||
(i) disposed of agricultural property (other than crops, trees or underwood), and | ||
(ii) any proceeds from such disposal were expended in directly replacing the agricultural property with other agricultural property within— | ||
(I) one year of the disposal, or | ||
(II) where the disposal arose as a consequence of a compulsory acquisition, within 6 years of the compulsory acquisition, | ||
then that other agricultural property shall be treated as if it were the agricultural property referred to in subparagraph (i). | ||
(5) The conditions referred to in subsection (2)(b)(ii) are that— | ||
(a) the disponer— | ||
(i) held a relevant qualification and used agricultural property (including the agricultural property comprised in the gift or inheritance) for the purposes of farming on a commercial basis and with a view to the realisation of profits from that agricultural property, or | ||
(ii) spent at least 50 per cent of his or her normal working time using agricultural property (including the agricultural property comprised in the gift or inheritance) for the purposes of farming on a commercial basis and with a view to the realisation of profits from that agricultural property, | ||
(b) the agricultural property comprised in the gift or inheritance was leased to an individual who satisfied the condition specified in subparagraph (i) or (ii) of paragraph (a), or | ||
(c) the condition specified in subparagraph (i) or (ii) of paragraph (a) was satisfied in relation to part of the agricultural property comprised in the gift or inheritance and the condition specified in paragraph (b) was satisfied in relation to the remainder of the agricultural property comprised in the gift or inheritance. | ||
(6) The conditions referred to in subsection (2)(d) are that the beneficiary— | ||
(a) holds a relevant qualification (or becomes the holder of a relevant qualification within a period of 4 years commencing on the date of the gift or inheritance) and uses agricultural property (including the agricultural property comprised in the gift or inheritance) for the purposes of farming on a commercial basis and with a view to the realisation of profits from that agricultural property, | ||
(b) spends at least 50 per cent of that individual’s normal working time using agricultural property (including the agricultural property comprised in the gift or inheritance) for the purposes of farming on a commercial basis and with a view to the realisation of profits from that agricultural property, | ||
(c) leases the agricultural property comprised in the gift or inheritance to an individual who satisfies the condition specified in paragraph (a) or (b), or | ||
(d) satisfies the condition specified in paragraph (a) or (b) in relation to part of the agricultural property comprised in the gift or inheritance and satisfies the condition specified in paragraph (c) in relation to the remainder of the agricultural property comprised in the gift or inheritance. | ||
(7) (a) Where, within the period of not less than 6 years commencing on the valuation date of the gift or inheritance, any of the agricultural property (other than crops, trees or underwood) comprised in the gift or inheritance is disposed of, either in whole or in part (other than by way of a lease referred to in subsection (6)(c)) and any part of the proceeds from such disposal are not expended in acquiring other agricultural property— | ||
(i) within one year of the disposal, or | ||
(ii) where the disposal arises as a consequence of a compulsory acquisition, within 6 years of the compulsory acquisition, | ||
then all or, as the case may be, part of the agricultural property shall, for the purposes of subsection (2), be treated as property comprised in the gift or inheritance which is not agricultural property and the taxable value of the gift or inheritance shall be determined in accordance with the formula set out in paragraph (b) without regard to the requirements of subsection (2)(c)) and tax shall be payable accordingly. | ||
(b) For the purposes of paragraph (a)— | ||
(i) the market value of agricultural property which is treated under paragraph (a) as not being agricultural property is determined by the formula— | ||
V1 × (N)/(V2) | ||
where— | ||
V1 is the market value of all of the agricultural property on the valuation date without regard to paragraph (a), | ||
V2 is the market value of that agricultural property immediately before the disposal of all or, as the case may be, a part thereof, and | ||
N is the amount of proceeds from the disposal of all the agricultural property or, as the case may be, a part thereof, that was not expended in acquiring other agricultural property, | ||
and | ||
(ii) the proceeds from a disposal— | ||
(I) shall include an amount equal to the market value of the consideration (not being cash) received for the disposal, where full consideration is received for the disposal, or | ||
(II) shall be an amount equal to the market value of the agricultural property immediately before the disposal, where less than full consideration is received for the disposal. | ||
(c) If an arrangement is made, in the administration of property subject to a disposition, for the appropriation of property in or towards the satisfaction of a benefit under the disposition, such arrangement is deemed not to be a disposal for the purposes of paragraph (a). | ||
(d) Subject to paragraph (e), where the proceeds referred to in paragraph (a) are expended in acquiring other agricultural property, then that other agricultural property shall, for the purposes of this section, be treated as if it were agricultural property comprised in the gift or inheritance. | ||
(e) Where the proceeds referred to in paragraph (a) are expended in acquiring agricultural property which has been transferred by the beneficiary to his or her spouse or civil partner, such property shall not be treated as other agricultural property for the purposes of that paragraph. | ||
(f) Paragraph (a) shall not apply where the beneficiary dies before the property is disposed of. | ||
(8) Where, during the period of not less than 6 years commencing on the valuation date, the beneficiary no longer satisfies one of the conditions specified in subsection (6), all or, as the case may be, part of the agricultural property shall, for the purposes of subsection (2), otherwise than on the death of the beneficiary, be treated as property comprised in the gift or inheritance that is not agricultural property, and the taxable value of the gift or inheritance shall be determined accordingly and tax shall be payable accordingly. | ||
(9) Where, pursuant to subsection (7) or (8), as the case may be, all or part of the property comprised in a gift or inheritance is to be treated as property that is not agricultural property then, by virtue of the return delivered in respect of the gift or inheritance being defective in a material respect, an additional return shall be delivered to the Commissioners, and any outstanding tax paid, in accordance with section 46(9). | ||
(10) Subsection (2) shall apply in relation to agricultural property which consists of trees or underwood as if paragraphs (b), (c) and (d) were omitted from that subsection. | ||
(11) Where solar panels are installed on no more than half the total area of land comprised in a gift or inheritance— | ||
(a) the land shall be regarded as agricultural land for the purposes of the definition of ‘agricultural property’ in subsection (1), | ||
(b) the conditions referred to in paragraphs (b)(ii) and (d) of subsection (2) shall be required to be satisfied only in respect of that part of the agricultural land comprised in the gift or inheritance on which solar panels are not installed, and | ||
(c) a lease of the land on which the solar panels are installed shall not constitute a disposal of the land for the purposes of subsection (7)(a). | ||
(12) Where, in the period of 6 years ending immediately prior to the date of the gift or inheritance comprising agricultural property, the disponer had become beneficially entitled in possession to that agricultural property on the death of his or her spouse or civil partner, then paragraph (b) of subsection (2) and subsections (4) and (5) shall, in relation to that agricultural property, apply as if a reference in those provisions to disponer were a reference to the spouse or civil partner concerned for that part of the period during which the disponer was not beneficially entitled in possession to the agricultural property concerned. | ||
(13) This section shall apply to gifts and inheritances taken on or after the date on which this section comes into operation. | ||
(14) For the purposes of this section, where a gift or inheritance is taken in the period of 6 years commencing on the date on which this section comes into operation, the period of 6 years referred to in subsection (2)(b) shall be treated as if it were the period commencing on the date on which this section comes into operation and ending on the date of the gift or inheritance.”. | ||
(2) Subsection (1) shall come into operation on such day or days as the Minister for Finance shall appoint either generally or with reference to any particular purpose or provision and different days may be so appointed for different purposes or different provisions. | ||