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HMRC internal manual

Inheritance Tax Manual

From
HM Revenue & Customs
Updated
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Lifetime transfers: annual exemption: multiple transfers

Multiple transfers on different days

If the transferor has made transfers to more than one liable person on different days in the same tax year, then apply the annual exemption to the earliest transfer first. It does not matter whether the transfers are potentially exempt (IHTM04057) or immediately chargeable (IHTM04067).

Example

On 1 July 2013 Ajani gives £4,000 to Ahmad. On 2 July 2013 Ajani gives £8,000 to Ajay. He has already made chargeable transfers that exceed the IHT threshold in the previous year and so tax is payable on the transfers. The annual exemption of £3,000 is available. All of the annual exemption is applied against the gift to Ahmad made on the 1 July.

Multiple transfers on the same day

If the transferor has made transfers to more than one liable person on the same day you should apportion the exemption between them.

Example

On the 3 August 2014 Ajani makes transfers of £4,000 to Ahmad and £8,000 to Ajay. The total value transferred is £12,000. No other transfers have been made in 2014 and so the annual exemption of £3,000 is available. This is apportioned between the two transfers as follows;

  • 4,000 ÷ 12,000 x £3,000 = £1,000 annual exemption is applied to the £4,000 transfer
  • 8,000 ÷ 12,000 x £3,000 = £2,000 annual exemption is applied to the £8,000 transfer

There is no need to be concerned about allocating the exemption between more than one transfer where

  • the cumulative total (IHTM14502) remains below the threshold, or
  • tax is payable but the precise allocation of the exemption does not affect the amount of tax payable on the transfers for that year by each person liable.