Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

Inheritance Tax Manual

From
HM Revenue & Customs
Updated
, see all updates

Transfers on death: deemed transfer on death

The first part of IHTA84/S4 (1) says that tax shall be charged as if the deceased had made a transfer of value (IHTM04024) immediately before their death. This creates a deemed transfer of value (IHTM04025). Under IHTA84/S3 (4) a deemed transfer of value is in general treated as an ordinary transfer of value. But the two principal effects of this approach to the death charge are that

  • reliefs under which certain types of disposition are not transfers of value, (IHTM04151) do not apply, but
  • other reliefs and exemptions do apply (except so far as they are expressly excluded). It is IHTA84/S3 (4) which makes, for example, BR and AR and the main exemptions, such as spouse or civil partner exemption (IHTM11032) available on death. Other exemptions will also apply unless they are expressly excluded, such as those intended to give relief only to lifetime transfers like

    • annual exemption (IHTM14141) IHTA84/S19 (5)
    • small gift exemption (IHTM14180) IHTA84/S20 (3)
    • normal expenditure out of income (IHTM14231) IHTA89/S21 (5); and
    • gifts in consideration of marriage or registration of civil partnership exemption