Inheritance Tax Act 1984 section 79

Exemption from ten-yearly charge

Section 79 provides an exemption from the ten-yearly inheritance tax charge on relevant property in a settlement where the property qualifies as conditionally exempt heritage property, such as works of art, historic buildings or land of outstanding scenic or scientific interest.

• Heritage property in a settlement that was the subject of a conditionally exempt transfer, or a capital gains tax exempt disposal of works of art, is exempt from the ten-yearly charge until a chargeable event occurs (such as a sale or breach of undertaking).
• Where no such prior transfer or disposal has occurred, the trustees can claim designation of the property by the Treasury under the heritage property rules, provided the necessary undertakings are given and the claim is made within two years of a ten-year anniversary (or such later date as HMRC allow).
• Once a chargeable event does occur on designated heritage property, a special charge arises based on the property's value at that time, calculated using a declining-rate scale applied to successive quarters within the relevant period, starting at 0.25% per quarter and reducing in steps down to 0.05% per quarter.
• Where both the special heritage charge and a separate charge under the conditionally exempt transfer rules arise on the same event, a double-charge relief applies: if the two charges are equal, each is halved; if they differ, the lower charge is reduced to nil.