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HMRC internal manual

Inheritance Tax Manual

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 in the following circumstances.

  • If immediately on the death, the property devolves beneficially on a body listed in IHTA84/SCH3.
  • If within 3 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), or transfer the property to the Board of HMRC in satisfaction of tax or interest, IHTA84/S32A (5)(b).

However, if only some of the associated properties are disposed of to a heritage body or the Board of HMRC, 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). Refer to Heritage if the question of the limitation of the 3 year period is raised.

  • If the disposal is a sale by private treaty to a body listed in IHTA84/SCH3, to such a body otherwise than by sale, or a transfer of the property to the Board of HMRC in satisfaction of tax or interest, IHTA84/S32A (5)(b).
  • If a 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 of HMRC in satisfaction of tax 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.
  • If the death or disposal is also a conditionally exempt transfer of the property, IHTA84/S32A (8)(a).
  • If 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).