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HMRC internal manual

Inheritance Tax Manual

From
HM Revenue & Customs
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Heritage property: exceptions to the charge under IHTA84/S32A

There are a number of exceptions to the charges arising under (IHTM04115) IHTA84/S32A. The death of a person beneficially entitled (IHTM04031) to the property or the disposal, by sale, gift or otherwise of the property is not a chargeable event if

  • immediately on the death, the property devolves beneficially on a body listed in IHTA84/SCH3, or
  • within three years of the death, the personal representatives of the deceased (or if the property is settled the trustees or person next entitled),

    • give the property, or sell it by way of private treaty, to a body listed in IHTA84/SCH3, IHTA84/S32A (5)(a),
    • transfer the property to the Board in satisfaction of IHT, CTT, ED or interest, IHTA84/S32A (5)(b).

However, if only some of the associated properties are disposed of to a heritage body or the Board, the event is a chargeable event as regards the remainder of the properties unless fresh undertakings are given for the items not disposed of, IHTA84/S32A (6). Should the question of the limitation of the three-year period be raised, you should refer your case to Heritage Section.

  • the disposal is

    • a sale by private treaty to a body listed in IHTA84/SCH3,
    • to such a body otherwise than by sale,
    • transfer of the property to the Board in satisfaction of IHT, CTT, ED or interest, IHTA84/S32A (5)(b).
  • death or a disposal occurs after the property has previously been

    • given or sold by private treaty to a body listed in IHTA84/SCH3, or
    • transferred to the Board in satisfaction of IHT, CTT, ED or interest

unless there has been an intervening conditionally exempt transfer, IHTA84/S32A (7). This covers the possibility that, as may happen, the heritage body may sell some of its treasures, or that the property may in some other way come back into private hands.

  • the death or disposal is also a conditionally exempt transfer of the property, IHTA84/S32A (8)(a)
  • the undertakings previously given are replaced by new undertakings, IHTA84/S32A (8)(b).Where only part of the associated properties are disposed of, then provided new undertakings are given, the event is only a chargeable event as regards the property actually disposed of, IHTA84/S32A (9).

Where undertakings are not observed for part of the associated properties, then if the entity of the associated properties as a whole has not been materially affected, the chargeable event will only extend to property to which the breach relates, IHTA84/S32A (10).