(1)This section applies where—
(a)part of the value of a person’s estate immediately before his death is attributable to the value of land F1. . . on which trees or underwood are growing but which is not agricultural property within the meaning of Chapter II of this Part of this Act, and
(b)either he was beneficially entitled to the land throughout the five years immediately preceding his death, or he became beneficially entitled to it otherwise than for a consideration in money or money’s worth.
[F2(1A)But this section applies only if the land is in the United Kingdom or another state which is an EEA state (within the meaning given by Schedule 1 to the Interpretation Act 1978) at the time of the person's death.]
(2)Where this section applies and the person liable for the whole or part of the tax so elects—
(a)the value of the trees or underwood shall be left out of account in determining the value transferred on the death, but
(b)tax shall be charged in the circumstances mentioned in section 126 below.
(3)An election under this section must be made by notice in writing to the Board within two years of the death or such longer time as the Board may allow.
Textual Amendments
F1Words in s. 125(1)(a) omitted (with effect as mentioned in s. 122(7)-(9) of the amending Act) by virtue of Finance Act 2009 (c. 10), s. 122(5)
F2S. 125(1A) inserted (with effect as mentioned in s. 122(7)-(9) of the amending Act) by virtue of Finance Act 2009 (c. 10), s. 122(6)
(1)Where under section 125 above the value of any trees or underwood has been left out of account in determining the value transferred on the death of any person, and the whole or any part of the trees or underwood is disposed of (whether together with or apart from the land on which they were growing) then, if the disposal occurs before any part of the value transferred on the death of any other person is attributable to the value of that land, tax shall be charged in accordance with sections 127 and 128 below.
(2)Subsection (1) above shall not apply to a disposal made by any person to his spouse [F3or civil partner] .
(3)Where tax has been charged under this section on the disposal of any trees or underwood tax shall not again be charged in relation to the same death on a further disposal of the same trees or underwood.
Textual Amendments
F3Words in s. 126(2) inserted (5.12.2005) by The Tax and Civil Partnership Regulations 2005 (S.I. 2005/3229), reg. 1(1), 24
(1)The amount on which tax is charged under section 126 above on a disposal of trees or underwood shall be—
(a)if the disposal is a sale for full consideration in money or money’s worth, an amount equal to the net proceeds of the sale, and
(b)in any other case, an amount equal to the net value of the trees or underwood at the time of the disposal.
(2)Where, if the value of the trees or underwood had not been left out of account in determining the value transferred on the death of the person in question—
(a)it would have been taken into account in determining the value of any relevant business property for the purposes of relief under Chapter I of this Part of this Act in relation to the transfer of value made on his death, or
(b)it would have been so taken into account if this Act had then been in force,
the amount on which tax is charged under section 126 above shall be reduced by 50 per cent.
[F4(1)]Tax charged under section 126 above on an amount determined under section 127 above shall be charged at the rate or rates at which it would have been charged on the death first mentioned in section 126 if—
(a)that amount, and any amount on which tax was previously charged under section 126 in relation to that death, had been included in the value transferred on death, and
(b)the amount on which the tax is charged had formed the highest part of that value.
[F5(2)In determining for the purposes of subsection (1) the rate or rates at which tax would have been charged on the amount determined under section 127, the effect of Schedule 1A (if it would have applied) is to be disregarded.]
Textual Amendments
F4S. 128(1) renumbered (with effect in accordance with Sch. 33 para. 10(1) of the amending Act) by Finance Act 2012 (c. 14), Sch. 33 para. 6(a)
F5S. 128(2) inserted (with effect in accordance with Sch. 33 para. 10(1) of the amending Act) by Finance Act 2012 (c. 14), Sch. 33 para. 6(b)
Where a disposal on which tax is chargeable under section 126 above is a chargeable transfer, the value transferred by it shall be calculated as if the value of the trees or underwood had been reduced by the tax chargeable under that section.
(1)In this Chapter—
(a)references to the value transferred on a death are references to the value transferred by the chargeable transfer made on that death;
(b)references to the net proceeds of sale or the net value of any trees or underwood are references to the proceeds of sale or value after deduction of any expenses allowable under this Chapter so far as those expenses are not allowable for the purposes of income tax; and
(c)references to the disposal of any trees or underwood include references to the disposal of any interest in the trees or underwood (and references to a disposal of the same trees or underwood shall, where the case so requires, be construed as referring to a disposal of the same interest).
(2)The expenses allowable under this Chapter are, in relation to any trees or underwood the value of which has been left out of account on any death,—
(a)the expenses incurred in disposing of the trees or underwood; and
(b)the expenses incurred in replanting within three years of a disposal (or such longer time as the Board may allow) to replace the trees or underwood disposed of; and
(c)the expenses incurred in replanting to replace trees or underwood previously disposed of, so far as not allowable on the previous disposal.