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HMRC internal manual

Inheritance Tax Manual

HM Revenue & Customs
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General procedure: situations where the exemption can be accepted without investigation

The instructions for each of the exemptions give details of specific provisions under which particular types of transfer are excluded from exemption. The provisions are complicated. However, in practice, you can accept without investigation that a bequest in a Will (IHTM12041) or codicil (IHTM12041) qualifies for exemption provided:

  • the beneficiary has the required status (see the specific instructions for the type of exemption in question), and
  • the gift is not subject to any conditions and consists of

    • the whole of the asset transferred, or
    • the whole of some lesser interest (for example a fractional share of property), or
    • in the case of joint property (IHTM15011), the proportion of the property to which the deceased was beneficially entitled (IHTM04031), and
  • the gift takes effect in possession either

    • immediately on the death, or
    • at the end of a period, no longer than twelve months, which is specified in the Will. Where such a period is specified in relation to a gift to a spouse or civil partner (IHTM11031you can accept any exemption deducted if it appears that the spouse or civil partner survived for that period.

You should note that the above is limited to gifts in a Will or codicil. Even gifts by Will or codicil will have to be restricted if the beneficiaries settle claims (IHTM11025) against the estate out of their own resources (IHTM11026).

Gifts to an exempt beneficiary need careful consideration if they are made by

  • Instrument of Variation (IHTM35011)
  • appointment by executors or trustees, or
  • orders (IHTM35231) under the Inheritance (Provision for Family and Dependants) Act 1975