Commentary

I3.721 Computation of the chargeable amount (land)

IHT, trusts and estates

I3.721 Computation of the chargeable amount (land)

I3.721 Computation of the chargeable amount (land)

Where a pre-owned assets charge arises in respect of any land, the 'chargeable amount' is the 'appropriate rental value' less the amount of certain allowable payments made by the taxpayer in respect of their occupation of the relevant land1.

Appropriate rental value

The 'appropriate rental value' for any 'taxable period' is determined as such part of the 'rental value' as is attributed, at the 'valuation date', to that part of the value of the relevant land that represents the taxpayer's disposal or contribution; the legislation2 prescribes a fraction, reproduced below, to be applied in making this calculation. Where the taxpayer has retained any interest in the land, the calculation will automatically exclude the rental value attributable to his retained interest.

The 'taxable period' is the year of assessment, or part of a year of assessment, during which the disposal condition or the contribution condition is met3. In the case of non-continuous occupation, it would appear to be possible to have more than one taxable period within a year of assessment.

The 'valuation date' is prescribed by regulations4 and is addressed in I3.743.

The 'rental value' is calculated for the taxable period5 (apportioning as appropriate where this is a period of less than a year), and is based on 'annual value'6, which assumes a hypothetical letting from year to year where the tenant undertakes to pay all taxes, rates and charges usually paid by a tenant, and the landlord undertakes to pay for repairs, insurance and any other

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