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HMRC internal manual

Inheritance Tax Manual

From
HM Revenue & Customs
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Lifetime transfers: gifts in consideration of marriage or registration of civil partnership: Rennell v IRC:

Rennell v IRC [1964] AC 173 was a decision on the marriage exemption for Estate Duty. The House of Lords held that a transfer had to satisfy three conditions to be accepted as made in consideration of marriage.

The conditions are that

  • the transfer must be made on the occasion of the marriage or civil partnership (IHTM11032)
  • it must be conditioned only to take effect on the marriage or civil partnership taking place, and
  • the transfer must be made by a person for the purpose of, or with a view to encouraging or facilitating, the marriage or civil partnership.

The expression ‘on the occasion of the marriage’ should be given its ordinary customary meaning. Transfers or settlements made after the marriage or civil partnership do not qualify for the exemption unless they were made to fulfil a binding promise made before the marriage or civil partnership. You may assume that there is a binding promise if the transferor definitely told the donee that they were going to make the transfer if the marriage or civil partnership took place.

If the donor took steps towards making the transfer before the marriage or civil partnership, for example by instructing their solicitors or brokers, but the transfer is not completed until after the marriage or civil partnership, it does not qualify for exemption unless they told the donee about it before the marriage or civil partnership. Refer any case in which it is difficult to identify the transfer with the promise to your manager.

If the marriage or civil partnership has taken place and the first condition is met, you may assume, unless there is evidence to the contrary, that the second condition is also satisfied. An example of such evidence could arise in the case of a transfer by way of settlement. The instrument could either confer an immediate unconditional beneficial interest in advance of the marriage or civil partnership or dispose of the settled property in some alternative way (otherwise than by way of reversion or resulting trust to the donor) if the marriage or civil partnership fails to take place.

The last condition does not apply where the transfer is to one of the spouses or civil partners and to nobody else: Re Park (No. 2) [1972] 2 WLR 276; [1972] 1 AER 394