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HMRC internal manual

Inheritance Tax Manual

Structure of the charge: what is a transfer of value?

A transfer of value is a disposition (IHTM04023) made by a person as a result of which the value of their estate has decreased. All lifetime transfers must start with a disposition. Charges arising on death and on settled property where a qualifying interest in possession exists (IHTM16062) are deemed transfers of value.

A transfer of value may only qualify as a potentially exempt transfer (IHTM04057) to the extent that it would, apart from IHTA84/S3A, be a chargeable transfer. This means that a transfer of value may be partly an exempt transfer (IHTM04026) and partly a potentially exempt transfer.

For example, Alison gives Belinda £10,000. As it is Alison’s first transfer of value in the tax year the annual exemption (IHTM14141) of £3,000 is available. So the gift is

  • an exempt transfer of £3,000, and as it would, apart from IHTA84/S3A, be a chargeable transfer, it is
  • a potentially exempt transfer of £7,000.