HMRC internal manual

Inheritance Tax Manual

IHTM11031 - Spouse or civil partner exemption: introduction

In general, under IHTA84/S18 (1), transfers of value between spouses or civil partners (IHTM11032) are wholly exempt. More specifically the section exempts a transfer of value (IHTM04024) to the extent that

  • it is attributable to property which becomes comprised in the estate (IHTM04029) of the transferor’s spouse or civil partner (IHTM11032) or (so far as it is not attributable)
  • the spouse’s or civil partner’s estate is increased, for example, when one spouse releases a debt due from the other

The exemption also applies to transfers of settled property (IHTM11062) in which the transferor had a qualifying interest in possession (IHTM16062).

The exemption is without a value limit except in one situation. This is where:

  • the transferor is domiciled (IHTM13000) in the UK immediately before the transfer but
  • the spouse or civil partner is domiciled outside the UK (IHTM11033).

The limit is set against the transferor’s total cumulative transfers to a spouse or civil partner in lifetime and on death.

The exemption is subject to several exclusions designed to prevent it being used for tax avoidance. Where the exemption can be accepted under general practice (IHTM11023) the exclusions need not be considered, but where the exemption cannot be accepted in this way you should consider whether the exclusions (IHTM11091) apply.