Section 124D — Inheritance Tax Act 1984: 100% relief allowance

100% relief allowance 124D 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 b the total amount by which the values transferred by chargeable transfers made by the transferor in the allowance period were treated as reduced as a result of section 104(1A) or 116(1A).

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 b the value of which is treated as reduced as a result of section 104(1A) or 116(1A).

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 iii section 104(1A) or 116(1A) would apply to reduce the value transferred if there were an amount of the 100% relief allowance available in relation to it, and b the potentially relievable value of a chargeable transfer is so much of the value transferred as would be treated as reduced as a result of section 104(1A) or 116(1A) if the 100% relief allowance available in relation to it were unlimited.