Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

Inheritance Tax Manual

From
HM Revenue & Customs
Updated
, see all updates

Procedure: straightforward gifts and acceptable bequests

A gift is straightforward if it is expressed as being given absolutely and unconditionally to a charity (IHTM11112). Sometimes expressions of intent or wishes are attached to the legacy. This does not necessarily prevent them from being straightforward.

A gift is considered not to be straightforward where

  • it is expressed to be for a special purpose (IHTM11175), or
  • it is for a subsidiary fund (IHTM11126) of an organisation
  • some element of avoidance of tax (IHTM11171) appears to be involved
  • a family or private (IHTM11130) charity is involved

Be careful to identify the particular beneficiary involved, for example, a bequest to Amnesty International is not a gift to Amnesty International British Section Charitable Trust. Remember that many ‘non-charitable’ organisations have a sister charity

You should accept a gift by the deceased’s will (IHTM12041) as being exempt (assuming the beneficiary is accepted as a charity (IHTM11112)) provided

  • it is not subject to a condition (IHTM11175) which is not satisfied within twelve months after the transfer
  • it takes effect in possession immediately (IHTM11174) on the death
  • it is not defeasible (IHTM11173) (for example, a gift which can be revoked or terminated by a future event)
  • it may not become applicable for other than charitable (IHTM11172) purposes
  • it consists of either the whole (IHTM11176) of the deceased’s interest in an asset, or the whole of some lesser interest for example, deceased’s half share of an asset

Example 1

Amy dies.

By Will she leaves the residue of her estate to Liam for life. On Liam’s death it passes to a qualifying charity.

Do not accept. The gift is not exempt on Amy’s death because the gift to the charity does not take effect in possession immediately on her death.

 

Example 2

Amy dies owning the freehold interest in the whole of ‘The Manor’.

By Will Amy makes a gift of a half share in ‘The Manor’ to a qualifying charity absolutely.

Accept. The gift is of the whole of the deceased’s interest in the half share.

 

Example 3

The facts are as in Example 2.

By Will Amy makes a gift of ‘The Manor’ to a qualifying charity for 20 years.

Do not accept. The gift is not of the whole of the deceased’s interest in the property because it is for a limited period of time.