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HMRC internal manual

Inheritance Tax Manual

From
HM Revenue & Customs
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Lifetime transfers: woodlands subject to a deferred Estate Duty charge

The broad effect of FA86/SCH19/PARA46 is to deny PET (IHTM04057) status to the whole of a lifetime transfer of value (IHTM04024) on or after 1 July 1986 involving land bearing timber on which there is an outstanding deferred charge to Estate Duty (ED). However the following concession was announced by Press Release dated 5 December 1990

“Para 46 Schedule 19 Finance Act 1986 denies potentially exempt transfer treatment for Inheritance Tax purposes to all property comprised in a single transfer any part of which, however small, is woodlands subject to a deferred Estate Duty charge. By concession the scope of this paragraph will henceforth be restricted solely to that part of the value transferred which is attributable to the woodlands which are the subject of the deferred charge”.

Only that part of a transfer which consists of woodlands (for clarity‘woodlands’ includes the underlying land as well as the timber trees and wood growing on it) on which there is an outstanding deferred charge to Estate Duty cannot be a PET by reason of FA86/SCH19/PARA46. In other words, to that extent only, the transfer is immediately chargeable, and the remainder of the transfer that is not subject to a deferred Estate Duty charge will remain a PET.