Rules about excepted estates: specified transfers
The concept of ‘specified transfers’ was introduced by SI1996/1470 IHT (Delivery of Accounts) Regulations 1996 on 1 July 1996 for deaths occurring on or after 6 April 1996. The term is used to describe chargeable transfers (IHTM04027) made by the deceased during their lifetime where the value transferred is attributable wholly to cash or quoted shares or securities.
The concept was extended for deaths on or after 6 April 2002 to include transfers of land together with furnishings and contents to be enjoyed with the land. It does not include gifts with reservation (IHTM06023) that fall under the provisions of IHTA1984/S102 and S102A(2).
This was extended further for deaths on or after 6 April 2004 by breaking the link between land and household and personal goods so that a gift of household and personal goods alone qualifies as a specified transfer.
Estates where there have been chargeable transfers within 7 years of death other than specified transfers cannot qualify as excepted estates.
In arriving at the value for specified transfers, only certain lifetime exemptions can be deducted. These are
- small gifts exemption (IHTM14180)
- annual exemption (IHTM14141)
- marriage/civil partnership exemption (IHTM14191) and
- normal expenditure out of income (IHTM14231)
With effect from 1 March 2011, exemption as normal expenditure out of income is limited to £3,000 per tax year (IHTM06027). If the amount of exemption for gifts that were made as normal expenditure out of income is more than the £3,000 limit the whole of the gift against which the exemption is taken
- is treated as a chargeable transfer and
- must be taken into account in determining whether or not the estate meets the conditions to qualify as an excepted estate.
It is the total value of the specified transfers after deduction of these exemptions alone and subject to the restriction above, that must not exceed the monetary limits below
|### Deaths (all dates inclusive)||### Specified transfers|
|6 Apr 1996 to 5 Apr 1998||£50,000|
|6 Apr 1998 to 5 Apr 2002||£75,000|
|6 Apr 2002 to 31 August 2006||£100,000|
|1 September 2006 onwards||£150,000|