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HMRC internal manual

Inheritance Tax Manual

Dispositions that are not transfers of value: introduction

There are a number of provisions in IHTA84/S10 to IHTA84/S17 which mean that the disposition (IHTM04023) concerned is not a transfer of value (IHTM04024). This does not make the transfers into exempt transfers (IHTM04026) but a disposition that satisfies the requirements cannot come within IHTA84/S3 (1) and so cannot be a chargeable transfer (IHTM04027).

However, as these provisions apply to an actual disposition, they cannot apply to a charge which is based on a deemed transfer (IHTM04025), unless the legislation specifically applies the provisions to the deemed transfer concerned.  This is because the legislation brings the charge into existence at a point after the provisions can apply (IHTM04022).

Example

Sophia dies on 16 March 2014 and by her Will leaves all her estate for the maintenance and education of her children who are under the age of 18. Had she made a disposition for this purpose during her lifetime this would not have been treated as a transfer of value under IHTA84/S11(1)(b) but as death is a deemed transfer for Inheritance Tax the estate is chargeable to tax.

In a limited number of situations the legislation does specifically apply these provisions to deemed transfers. An example is the application of IHTA84/S10, IHTA84/S11 and IHTA84/S16 to lifetime dispositions of settled property (IHTM04083).