Excepted transfers and terminations - value transferred attributable to cash or quoted shares or securities
Where the property given away, or in which the interest subsists is wholly attributable to cash or quoted stocks and securities, the disposal will qualify as an excepted transfer or termination provided the cumulative total of all chargeable transfers (IHTM04027) made by the transferor in the seven years before the transfer, together with the value of the current chargeable transfer, does not exceed the IHT nil rate band.
This is a relatively straightforward test that, in effect, allows any transfer or termination of cash or quoted stocks or securities to be an excepted transfer or termination provided the disposal does not give rise to an immediate payment of tax. However, the transfer or termination must only be attributable to cash, or quoted stocks or securities, or a mixture of both; if there are any other assets in the mix, the transfer cannot be excepted under this test.
However, where the transfer or termination is cumulated with earlier disposals, they do not all have to be attributable to cash or quoted shares or securities - only the current disposal has to satisfy that part of the test.
The transferor makes his first transfer of £306,000 cash into a relevant property trust in January 2008. This will qualify as an excepted transfer as the chargeable transfer after deduction of annual exemptions is £300,000.
The life tenant of a trust had a cumulative total of £200,000 that arose following a chargeable transfer of a half share of realty. The trustees terminate her life interest in £100,000 that is attributable to quoted shares. This will qualify as an excepted termination as the cumulative total of chargeable transfers following this event does not exceed £300,000.