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HMRC internal manual

Inheritance Tax Manual

Dispositions not intended to confer bounty: first condition - gift not intended

The first condition in IHTA84/S10 is that the disposition (IHTM04164) was not intended, and was not made in a transaction intended, to confer any gratuitous benefit on any person. (IHTM04052). It is necessary for the person claiming that a disposition is within IHTA84/S10 to show that the transferor

  • sought to obtain the full open market price under the transaction, and
  • had no donative intent.Example 1

A puts Blackacre for sale on the open market. Its value is considered to be £100,000. B, a stranger, starts negotiations to buy. B discovers that A needs a quick sale for personal reasons, e.g. because he is emigrating shortly. So B offers only £82,000, but in cash with an undertaking to complete the purchase very soon. A accepts because of his own circumstances. There is no gratuitous intent.

Example 2

Dispositions made on divorce or dissolution of a civil partnership (IHTM11032) for the benefit of a former spouse or civil partner, whether under a Court Order or as a result of arm’s length negotiations, are normally within IHTA84/S10.