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HMRC internal manual

Inheritance Tax Manual

Lifetime transfers: schemes to exploit annual exemption: transfer of part of a property

Annual transfers of part of a property are sometimes referred to as ‘salami slicing’.

The scheme falls into four broad categories:

  • The transfer of a sum of money (IHTM14162)
  • The transfer of a share equal in value to a sum of money (IHTM14163)
  • Transfer of shares quantified by loss in value (IHTM14164)
  • Property on trust for sale and proceeds split between transferor and transferee (IHTM14165)

If the deed does not fit precisely into one of the categories, refer the case to Technical to liaise with the Valuation Office (IHTM23002) as to the manner of reference required, or to your manager if you suspect that tax avoidance may be involved.

Before full investigation, it is important that you check what exemptions and reliefs are due against the death estate and generally to consider whether any adjustment to the values offered will be worthwhile.

For any of the above categories, you must establish the facts, and obtain copies of the documents making the transfer (a copy of the first transfer will normally be sufficient to begin with). You may also need to consider who occupied the property between the first transfer and the transferor’s death and the basis on which they occupied it.

Unless they are immediately apparent, ask the taxpayer’s views of the effect of the deeds and their calculation of the share of the property transferred or retained. If the results are broadly similar to our own, they can be followed. If it is not clear whether the taxpayer or agent’s calculations reach similar results to ours, refer a copy of their schedule or letter to the Valuation Office with our reference and ask whether their calculations produce similar results to ours.(This content has been withheld because of exemptions in the Freedom of Information Act 2000)