Finance (No.2) Act 2023

• Permanent Page URL

Amendment of Part 10 of Principal Act (agricultural relief and business relief)

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

(a) in subsection (1)—

(i) in the definition of “agricultural property”, by the substitution of the following paragraph for paragraph (b):

“(b) a payment entitlement (within the meaning of Regulation (EU) 2021/2115 of the European Parliament and of the Council of 2 December 2021¹⁹ );”,

and

(ii) in the definition of “farmer”, in paragraph (b)(ii), by the substitution of “object (within the meaning of Chapter 2 of Part 3) of the trust” for “object of the trust”,

(b) in subsection (4)—

(i) in paragraph (a)—

(I) in subparagraph (i)—

(A) by the substitution of “in whole or in part, other than by way of a lease referred to in paragraph (iii) of the definition of ‘farmer’ in subsection (1),” for “or compulsorily acquired”, and

(B) by the substitution of “valuation date of the gift or inheritance or, where subsection (3) applies, the date the taxable gift or inheritance is invested in agricultural property” for “date of the gift or inheritance”,

(II) by the substitution of the following subparagraph for subparagraph (ii):

“(ii) the proceeds from such disposal are not fully expended in acquiring other agricultural property within—

(I) 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,”,

and

(III) by the substitution of “before the property is disposed of” for “before the property is disposed of or compulsorily acquired”,

(ii) in paragraph (aa)—

(I) in subparagraph (i), by the deletion of “or compulsory acquisition” in both places where it occurs, and

(II) by the substitution of the following subparagraph for subparagraph (ii):

“(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) by the substitution of the following subsection for subsection (4B):

“(4B) Where a donee, successor or lessee ceases to qualify as a farmer, because he or she no longer satisfies the conditions specified in paragraph (i), (ii) or (iii), as the case may be, of the definition of ‘farmer’ in subsection (1), within the period of 6 years commencing on the valuation date of the gift or inheritance, or, where subsection (3) applies, the date the taxable gift or inheritance is invested in agricultural property, 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.”,

and

(d) by the insertion of the following subsection after subsection (4B):

“(4C) Where, pursuant to subsection (4)(a) or (4B), 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).”.

(2) Section 101 of the Principal Act is amended—

(a) in subsection (1), by the substitution of “valuation date” for “date”,

(b) in subsection (2)(b), by the substitution of “is disposed of in whole or in part within the relevant period and is not replaced, within a year of the disposal,” for “is sold, redeemed or compulsorily acquired within the relevant period and is not replaced, within a year of the sale, redemption or compulsory acquisition,”, and

(c) by the insertion of the following subsection after subsection (3):

“(3A) Where, pursuant to subsection (2), the reduction in value in respect of all or part of the property comprised in a gift or inheritance ceases to be applicable 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).”.

(3) Section 102A(2) of the Principal Act is amended—

(a) in subparagraph (c)—

(i) by the deletion of “by the donee or successor”, and

(ii) by the substitution of “the valuation date of the gift or inheritance” for “the date of the gift or inheritance”,

and

(b) by the substitution of “, 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)” for “tax shall be payable accordingly”.

(4) Subsection (1) (b) (i) (I) (B), paragraphs (a) and (b) of subsection (2) and subsection (3) (a) (ii) shall not apply in relation to gifts or inheritances taken before 1 January 2024.

¹⁹ OJ No. L435, 6.12.2021, p.1