Finance Act 2014

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Amendment of section 89 of Principal Act (provisions relating to agricultural property)

82. (1) Section 89 of the Principal Act is amended—

(a) in subsection (1) by substituting the following for the definition of “farmer”:

“‘farmer’, in relation to a donee or successor, means an individual in respect of whom not less than 80 per cent of the market value of the property to which the individual is beneficially entitled in possession is represented by the market value of property in a Member State which consists of agricultural property, and, for the purposes of this definition—

(a) no deduction is made from the market value of property for any debts or encumbrances (except debts or encumbrances in respect of a dwelling-house that is the only or main residence of the donee or successor and that is not agricultural property), and

(b) 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, 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 of the trust,

and who—

(i) is the holder of any of the qualifications set out in Schedule 2, 2A or 2B to the Stamp Duties Consolidation Act 1999 , or who achieves such a qualification within a period of 4 years commencing on the date of the gift or inheritance, and who for a period of not less than 6 years commencing on the valuation date of the gift or inheritance farms agricultural property (including the agricultural property comprised in the gift or inheritance) on a commercial basis and with a view to the realisation of profits from that agricultural property,

(ii) for a period of not less than 6 years commencing on the valuation date of the gift or inheritance spends not less than 50 per cent of that individual’s normal working time farming agricultural property (including the agricultural property comprised in the gift or inheritance) on a commercial basis and with a view to the realisation of profits from that agricultural property, or

(iii) leases the whole or substantially the whole of the agricultural property, comprised in the gift or inheritance for a period of not less than 6 years commencing on the valuation date of the gift or inheritance, to an individual who satisfies the conditions in paragraph (i) or (ii).”,

and

(b) by inserting the following after subsection (4A):

“(4B) Where a donee, successor or lessee ceases to qualify as a farmer under subsection (1) within the period of 6 years commencing on the valuation date of the gift or inheritance, 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 donee, successor or lessee, 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.”.

(2) This section shall have effect in relation to gifts or inheritances taken on or after 1 January 2015.