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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

Angela puts Blackacre for sale on the open market. Its value is considered to be £100,000.  Barry, a stranger, starts negotiations to buy.  He discovers that Angela needs a quick sale for personal reasons, e.g. because she is emigrating shortly. So Barry offers only £82,000, but in cash with an undertaking to complete the purchase very soon. Angela accepts because of her 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, as a result of arm’s length negotiations, will not normally give rise to a transfer of value in view of IHTA84/S10. Alternatively, IHTA84/S11(a) (IHTM04173) may apply. There is no transfer of value where the disposition is made as a result of a Court Order (IHTM11032).