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HMRC internal manual

Inheritance Tax Manual

From
HM Revenue & Customs
Updated
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Excepted settlements - ten year charge

Where a ten year charge has arisen and the settlement passes the general conditions (IHTM06123), it will qualify as an excepted settlement where the value of the notional aggregate chargeable transfer (IHTM42082) specified in IHTA84/S66(3) does not exceed 80% of the nil rate band.

For the purposes of calculating the value of the notional chargeable transfer, no relief that might be due should be deducted and any liabilities that may be deductible from assets in charge should also be ignored.

And in arriving at the notional aggregate chargeable transfer, if the total of previous cumulative transfers includes proportionate charges (IHTM06125) that were themselves excepted from delivering an account, the values to be used in arriving at the total of previous cumulative transfers must also be before deduction of any relief or liabilities.

So, for example, if a proportionate charge arose on the disposal by the trustees of a piece of agricultural land and no account was required (because the value of the notional aggregate chargeable transfer did not exceed 80% of the nil rate band), when it comes to working out whether an account is required in respect of the ten year charge, the agricultural relief must be ignored.