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HMRC internal manual

Inheritance Tax Manual

Lifetime transfers: basis of valuation: summary

The general rule under IHTA84/S3 is that the value transferred by a transfer of value (IHTM04024) is the:

  • amount by which the value of the transferor’s estate is reduced (the loss to the estate principle) (IHTM04054). (See also IHTM04093 and IHTM04094 for the position when a life interest comes to an end during the life tenant’s lifetime.)
  • but taking no account of any excluded property (IHTM04251) which is no longer part of the transferor’s estate as a result of that disposition.

To work out the loss to the transferor’s estate you must also take into account other property in the transferor’s estate, such as settled property (IHTM04081) and related property (IHTM09731).