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HMRC internal manual

Inheritance Tax Manual

Estate Duty surviving spouse exemption: restriction on exemption because of non-payment of duty

Exemption is not due to the extent that the property on the second death represents items which did not bear duty on the first death. Such items included the following

  • the gratuity payable to a Civil Servant who died before retirement. Being discretionary, such payments were outside the charge to duty
  • discretionary payments from superannuation funds to the personal representatives of the first spouse to die,
  • works of art exempted until sale. Such items may, instead, qualify for conditional exemption on the death of the second spouse.

You should not raise enquiries as to the possible existence of such items unless there is a positive indication that they are likely to have formed part of the settled fund, and unless there is a worthwhile amount of tax at stake.