Inheritance Tax Act 1984 section 39A

Operation of sections 38 and 39 in cases of business or agricultural relief

Section 39A modifies the rules for attributing value to specific gifts and residuary gifts when part of the value transferred by a chargeable transfer qualifies for business property relief or agricultural property relief.

• Specific gifts of business or agricultural property are valued at their reduced amount after applying 100% or 50% business property relief (section 104) or agricultural property relief (section 116)
• Specific gifts of other (non-relievable) property are valued at an "appropriate fraction" of their unreduced value, so they bear a fair share of the overall reduction caused by the reliefs
• The appropriate fraction is calculated by comparing the total value transferred after relief with what it would have been without relief, excluding in each case the value of any relievable specific gifts
• A gift payable out of relievable property (such as a pecuniary legacy charged on the farm) is not itself treated as a gift of relievable property, and its value is excluded from the relievable specific gift

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