Policy paper

Draft legislation (accessible version)

Published 26 November 2025

© Crown copyright 2025

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Gifts to charities and registered clubs

1. Scope of exemption for gifts to charities and registered clubs

  1. (1) IHTA 1984 is amended as follows.

  2. (2) In section 23 (gifts to charities or registered clubs), in subsection (6)—

    1. (a) in paragraph (a), omit “or is held on trust for charitable purposes only”;

    2. (b) in paragraph (b), omit “or is held on trust for purposes of registered clubs only”.

  3. (3) In section 29A (abatement of exemption where claim settled out of beneficiary’s own resources), in subsection (6), in paragraph (b) of the definition of “the exempt beneficiary”, omit sub-paragraph (ii) and the “or” before it.

  4. (4) In section 142 (alteration of dispositions taking effect on death)—

    1. (a) in subsection (3A), for “the appropriate person” substitute “the charity or registered club to which the property is given”;

    2. (b) omit subsection (3B).

  5. (5) The amendments made by this section have effect—

    1. (a) in relation to a transfer of value made on a person’s death, if the person dies on or after 6 April 2026;

    2. (b) in relation to a transfer of value made at any other time, if the transfer is made on or after 26 November 2025.

References in this subsection to the making of a transfer of value are to be construed in accordance with IHTA 1984.

2. Section1: transitional protection for existing interests in possession

  1. (1) Subsection (2) applies in relation to a transfer of value (“the original transfer”) to the extent that the value transferred by it is attributable to property which meets each of the following conditions, namely—

    1. (a) that immediately before the original transfer a person was beneficially entitled to an interest in possession in the property to which section 49(1) of IHTA 1984 (interests treated as part of estate) applied;

    2. (b) that the person became beneficially entitled to the interest in possession before 26 November 2025;

    3. (c) that by virtue of the original transfer the property is held on trust— (i) only for charitable purposes, or (ii) only for purposes of registered clubs, but is not given to charities or registered clubs;

    4. (d) that the property is given to charities or registered clubs within the period of 2 years beginning with the date of the original transfer (“the subsequent gift”).

  2. (2) For the purposes of IHTA 1984— 1 Draft Finance (No. 2) Bill Measures

    1. (a) the original transfer is treated as attributable (and as always having been attributable) to property given to charities or registered clubs, and

    2. (b) the subsequent gift is disregarded.

  3. (3) Subsections (1) and (2) have effect—

    1. (a) where the original transfer is made on a person’s death, if the person dies on or after 6 April 2026;

    2. (b) where the original transfer is made at any other time, if the transfer is made on or after 26 November 2025.

  4. (4) Subsections (1) to (3) are to be construed as though they were contained in section 23 of IHTA 1984.

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