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HMRC internal manual

Inheritance Tax Manual

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HM Revenue & Customs
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Exemptions: conditional exemption

Sections IHTA84/S30 to IHTA/S35 give effect to the general policy of allowing conservation of items of national heritage by enabling transfers of value (IHTM04024) to be conditionally exempted to the extent that

  • the property transferred is designated by HMRC as of national interest, and
  • an appropriate person, usually the new owner, gives undertakings to

    • preserve the property
    • allow reasonable public access, and
    • keep any works of art (or other items) in the UK

The exemption is described as conditional because there is normally a tax charge if the undertakings are broken or the property is sold or given away.

Under IHTA84/S30 (1) a transfer of value is an exempt transfer to the extent that the value transferred is attributable to property

  • which, on a claim being made, is designated by the Board, and
  • in respect of which certain undertakings are given

Conditional exemption is not available to the extent to which a transfer of value is exempt under

Subject to those exclusions conditional exemption is available on the following transfers, including the termination of an interest in possession in settled property

  • transfers on death, including Gifts With Reservation (IHTM14025) within FA86/S102 (3).
  • certain lifetime transfers (IHTM14000).

Under IHTA84/S31 (1) the categories of property which may be designated are

  • Pictures, prints, books, manuscripts, works of art, scientific collections, and other things not yielding income which are of national, scientific, historic or artistic interest
  • Land of outstanding scenic, historic or scientific interest
  • Buildings of outstanding historic or architectural interest

    • Their essential amenity land, and
    • Objects historically associated with them.

The exemption has to be claimed and the required undertakings given by the appropriate person. The Heritage Team is primarily responsible for administering the exemption.