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HMRC internal manual

Inheritance Tax Manual

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

A deemed transfer of value is one that is imposed by statute on a particular event or series of events. In general, the Inheritance Tax legislation applies to deemed transfers of value in the same way as it does to actual transfers of value, but

  • certain exemptions – mainly lifetime exemptions (IHTM14131) – may not apply
  • reliefs which say that a particular event shall not be a transfer of value (IHTM04151) cannot apply, and
  • the value transferred may not be established by reference to the loss to transferor’s estate. (IHTM04054)

Events that are deemed to be transfers of value are

  • on death, (IHTM04041)
  • the termination or disposal of a qualifying interest in possession in settled property, (IHTM04083)
  • a transfer by a close company, (IHTM04067)
  • property ceasing to be subject to a reservation of benefit in the donor’s lifetime (IHTM04064) which is a deemed potentially exempt transfer (PET),
  • the discharge or reduction of a debt subject to abatement (IHTM04064) under FA86/S103, which is a deemed PET.