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HMRC internal manual

Inheritance Tax Manual

Lifetime transfers: what is an immediately chargeable transfer?

Any lifetime transfer that does not qualify as a potentially exempt transfer (PET) (IHTM04057) will be immediately chargeable to Inheritance Tax under IHTA84/S3 (1). Two transfers that do not qualify are a

  • transfer into a relevant property trust, because the gift is not to an individual or one of the specified trusts, see IHTM04058  and
  • transfer to a company, see example 2 at IHTM04060

There may also be an alternative charge on the property transferred under the gift with reservation rules. (IHTM04071)

There are four other transfers of value (IHTM04024) that are specifically prevented from being PETs. These are a

  • transfer by a close company, (IHTM04068) IHTA84/S94 (1),
  • the deemed disposition on the alteration in the capital or share rights (IHTM04069) of close companies, IHTA/S98 (3),
  • the release of a life interest (IHTM04063) between 18 March 1986 and 16 March 1987, and
  • the transfer of woodlands (IHTM04062) subject to an outstanding Estate Duty charge, which only qualifies for partial PET treatment.