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HMRC internal manual

Inheritance Tax Manual

HM Revenue & Customs
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Lifetime transfers: gifts in consideration of marriage or registration of civil partnership: Rennell v IRC - gifts by way of settlement

Where there is a transfer of settled property (IHTM16000) you will need to consider whether all the provisions of the settlement comply with the conditions of Rennell (IHTM14201). This is because the transfer is of the settled property as a whole, and not of the several beneficial interests created by it.

The element of contingency, in the second of the conditions (IHTM14201), does not need to be expressed in the settlement, but can be inferred from circumstances. For example, where, before the marriage or civil partnership (IHTM11032), a settlement is made and retained by the agents to hold it until the time of the ceremony, you can regard the second condition as satisfied.

A trust in favour of a settlor until the marriage or civil partnership takes place does not give rise to a claim for tax at the time that the settlement is made. At that stage there is no transfer of value since there would have been no loss of value to the settlor’s estate. When the marriage or civil partnership takes place, there will then be a termination of the settlor’s interest in possession giving rise to a possible claim under IHTA84/S52 (1). The marriage or civil partnership gift exemption on the termination of the settlor’s interest in possession would be available as long as the normal conditions of marriage or civil partnership exemption are met, including those applicable on the termination of an interest in possession (IHTM14221).