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HMRC internal manual

Inheritance Tax Manual

Waiver of dividends

IHTA84/S15 provides for relief when a person (IHTM04052) waives any dividend on shares in a company. If the waiver is made within 12 months before any right to the dividend has accrued, under IHTA84/S15, the waiver does not of itself (see below) constitute a transfer of value (IHTM04024). Use of the word ‘person’ enables the section to apply to waivers by companies as well as by individuals. (IHTM04053)

For British companies, it is considered that a right to

  • a final dividend accrues at the time when the dividend is declared by the company in general meeting,
  • an interim dividend accrues at the time it is paid

and you should calculate the time limit accordingly.

For dividends of foreign companies, initially you should assume that the rights to dividends accrue in the same manner. If this view is challenged, you should obtain full details of the company’s constitution or articles and refer to Technical when the information is received.

Limited scope of IHTA84/S15

IHTA84/S15 applies only to the waiver of a dividend on shares in a company. It does not apply to the waiver or release of any other form of income, such as rent or interest on any form of debt, including debentures and loans.

IHTA84/S15 provides only that a person does not make a transfer of value ‘by reason of the waiver’. You need to be careful if the situation you are concerned with

  • is not a straightforward waiver, but
  • appears to be part of a series of operations aimed at achieving a transfer of value not related solely to the dividend waived.

In such a situation, you should not comment on the aopplication of IHTA84/S15 but simply obtain the facts and, when you have received them, refer the case to Technical.