Paragraph 2 F1

(1)

This paragraph applies to an interest in a close company or in a partnership, if and to the extent that the interest meets the condition in sub-paragraph (2).

(2)

The condition is that the value of the interest is—

(a)

directly attributable to F2relevant UK property, or

(b)

attributable to relevant UK property by virtue only of one or more of the following—

(i)

an interest in a close company;

(ii)

an interest in a partnership;

(iii)

property to which paragraph 3 (loans) applies.

(3)

For the purposes of sub-paragraphs (1) and (2) disregard—

(a)

an interest in a close company, if the value of the interest is less than 5% of the total value of all the interests in the close company;

(b)

an interest in a partnership, if the value of the interest is less than 5% of the total value of all the interests in the partnership.

(4)

In determining under sub-paragraph (3) whether to disregard a person's interest in a close company or partnership, treat the value of the person's interest as increased by the value of any connected person's interest in the close company or partnership.

(5)

In determining whether or to what extent the value of an interest in a close company or in a partnership is attributable to F3relevant UK property for the purposes of sub-paragraph (1), liabilities of a close company or partnership are to be attributed rateably to all of its property, whether or not they would otherwise be attributed to any particular property.

Annotations

Textual amendments

F1: Sch. A1 inserted (with effect in accordance with Sch. 10 para. 9 of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 10 para. 1 (with Sch. 10 para. 9(2))
F2: Words in Sch. A1 para. 2(2)(a)(b) substituted (with effect in accordance with Sch. 12 para. 20 of the amending Act) by Finance Act 2026 (c. 11), Sch. 12 paras. 18(3)(a)(i), 20
F3: Words in Sch. A1 para. 2(5) substituted (with effect in accordance with Sch. 12 para. 20 of the amending Act) by Finance Act 2026 (c. 11), Sch. 12 paras. 18(3)(a)(ii), 20

Notes on the whole Act

Textual amendments

F1: By Finance Act 1986 s. 100(1), on and after 25 July 1986 the Capital Transfer Tax Act 1984 may be cited as the Inheritance Tax Act 1984.

Notes on Part 1

Textual amendments

F2: Words in Sch. A1 Pt. 1 heading inserted (with effect in accordance with Sch. 12 para. 20 of the amending Act) by Finance Act 2026 (c. 11), Sch. 12 paras. 18(2), 20