Finance Act 1976

4 (1) Property is not relevant business property in relation to a transfer of value unless—

(a) it was owned by the transferor throughout the two years immediately preceding the transfer ; or

(b) it replaced other property and it, the other property and any property directly or indirectly replaced by the other property were owned by the transferor for periods which together comprised at least two years falling within the five years immediately preceding the transfer of value ;

and, in the case of paragraph (b) above, any other property concerned was such that, had the transfer of value been made immediately before the property was replaced, that property would (apart from this paragraph) have been relevant business property in relation to the transfer.

(2) Subject to sub-paragraph (3) below, in a case falling within sub-paragraph (1)(b) above relief under this Schedule shall not exceed what it would have been had the replacement or any one or more of the replacements not been made.

(3) For the purposes of sub-paragraph (2) above changes resulting from the formation, alteration or dissolution of a partnership or from the acquisition of a business by a company controlled by the former owner of the business shall be disregarded.

(4) For the purposes of this paragraph, where the transferor became entitled to any property on the death of another person—

(a) he shall be deemed to have owned it from the date of the death ; and

(b) if that other person was his spouse he shall also be deemed to have owned it for any period during which the spouse owned it.