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HMRC internal manual

Inheritance Tax Manual

Transfers on death: what makes up the estate on death

The second part of IHTA84/S4 (1) quantifies the deemed transfer by reference to the value of the deceased’s estate immediately before death. This brings within the death charge the whole of the deceased’s beneficial estate (IHTM04029) as defined in IHTA84/S5 (1), including settled property in which they had a qualifying interest in possession (IHTM16062) and any gift with reservation (IHTM14301) property, but not excluded property. (IHTM04251)

It also means that general provisions governing the value of a person’s estate apply, for example, IHTA84/S5 (3) (allowance for liabilities).

The reference to the value immediately before death is subject to IHTA84/S171 which largely allows changes in value caused by the death (IHTM04046) to be taken into account.