I4.240 Attribution where there is BPR or APR — the 'spreading' provisions
Previously, where a deceased's estate was partially exempt, and the estate included business or agricultural property, it was possible to ensure the business property relief (BPR) or agricultural property relief (APR) (see Division I7.1 and Division I7.3) was set against the chargeable part of the estate even though the property attracting the relief in fact passed to an exempt beneficiary.
Express rules for the interaction of BPR or APR and partial exemption were introduced to correct this anomaly, in relation to transfers of value after 17 March 1986, by FA 1986, s 105 adding IHTA 1984, s 39A.
Where any part of the value transferred by a transfer of value made after 17 March 1986 is attributable to the value of relevant business property1 or to the agricultural value of agricultural property, the rules for attributing the value transferred between exempt and non-exempt gifts described in I4.236–I4.239A have effect subject to IHTA 1984, s 39A(2)–(7)2.
The effect of those subsections can be broadly summarised as follows:
• a specific gift of property which attracts BPR or APR is treated as reduced by the relief
• relief relating to business or agricultural property