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HMRC internal manual

Inheritance Tax Manual

HM Revenue & Customs
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Restrictions on the freedom to dispose of assets: no consideration given

If no consideration is given for the granting of an option then the option can be ignored when the person granting the option dies. But the granting of the option by deed will itself be a contract within the meaning of IHTA84/S163.

If the grant of the option

  • gave rise to a claim for tax as a chargeable transfer, or
  • was part of associated operations which together were a chargeable transfer

an allowance is made for the ungrossed value transferred by the chargeable transfer sofar as is attributable to the restriction. This is intended to prevent a double charge to tax.



The facts are the same as in the example at IHTM090774 (IHTM09774) except that there was no consideration given for the option. The option was gifted.

The open market value of Blackacre at the date of death is £100,000, the option on the property is ignored because there was no consideration.

But under IHTA84/S163 (1)(b) if the gift was a PET (IHTM04057) that becomes chargeable to tax as a result of the death or was previously taxed when made the date of death value of Blackacre is reduced by £30,000.