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HMRC internal manual

Inheritance Tax Manual

Structure of the charge: how a disposition becomes a chargeable transfer

This page describes how a disposition becomes a chargeable transfer.

Step 1

There must be a disposition – see IHTM04023.

Step 2

If there is a disposition is it of excluded property? (IHTM04251)  Inheritance Tax (IHT) is not charged on excluded property.

Step 3

If the disposition is not of excluded property is it a transfer of value? IHTA84/S10 to S17 prevent certain dispositions becoming a transfer of value – see IHTM04151.

If the provisions of S10 to S17 do not apply, the disposition will be a transfer of value. (IHTM04024)

Step 4

If there is a transfer of value is the value transferred reduced by any reliefs? If they apply, reliefs such as agricultural (IHTM24000) and business (IHTM25000) relief will reduce the value transferred.

Step 5

Are any exemptions, such as for transfers to spouses or civil partners (IHTM11031) or to charities (IHTM11101) to be deducted from the value transferred? Exemptions are deducted after applying any reliefs, such as those mentioned at Step 4, that are due.

Step 6

If the value transferred is not wholly reduced by any reliefs, or is not exempt, there will be a chargeable transfer. (IHTM04027)

However, there may still be circumstances where IHT is not charged on a chargeable transfer as the value of certain property transferred is left out of account – see IHTM04331.