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HMRC internal manual

Inheritance Tax Manual

Exclusions from exemption: gift less than donor’s whole interest or for a limited period

Under IHTA84/S23 (3) a gift to a charity (IHTM11112) is not exempt if the property given is an interest in other underlying property and either

  • that interest is less than the donor’s full interest (this must be established at a time twelve months after the transfer), or
  • the property is given for a limited period

This exception does not apply simply because the gift is an undivided share of the property.



Joseph owned the freehold interest in the whole of Hall Farm.

The effect of IHTA84/S23 (3) on possible alternative gifts by will (IHTM12041) is:

  • a gift of a half share of Hall Farm to a charity: IHTA84/S23 (3) does not prevent the exemption applying
  • a gift of a leasehold interest to a charity: IHTA84/S23 (3) prevents the exemption from applying.

But if Joseph had owned only a leasehold interest in Hall Farm and had given the whole of that leasehold interest to the charity, IHTA84/S23 (3) would not have prevented the exemption from applying.