Exceptions where the exemption does not apply: conditional gifts
Under IHTA84/S18 (3) (b), a gift to a spouse or civil partner (IHTM11032) is not exempt if it depends on a condition which is not satisfied within twelve months after the transfer.
In his will Adam leaves his wife a legacy which
- is dependant on his wife surviving Adam for more than twelve months, and
- does not carry the intermediate income
The legacy is not exempt
A different situation arises where a bequest to a spouse or civil partner is made on condition that the spouse or civil partner makes a specified provision for a chargeable beneficiary within a period of 12 months or more.
If the spouse or civil partner does, in fact, satisfy the condition within a year of the death, IHTA84/S18 (3) (b) does not prevent the spouse or civil partner exemption applying. But you should, of course, adjust the amount of exemption to reflect the reduced benefit to the spouse or civil partner.
IHTA84/S18 (3) (b) does not apply where the transfer between spouses or civil partners is:
- a loan (IHTM11042) by one spouse or civil partner to another or
- a disposition allowing the other spouse or civil partner the use of property.