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HMRC internal manual

Inheritance Tax Manual

From
HM Revenue & Customs
Updated
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Lifetime transfers: gifts in consideration of marriage or civil partnership: termination of IIP in settled property

The gift in consideration of marriage or civil partnership exemption (IHTM14191) applies to the termination of an interest in possession (IHTM16001) in settled property on the basis that references to:

  • transfers of value (IHTM04024) made by gifts in consideration of marriage or civil partnership are read as including the termination of interests in possession in consideration of marriage or civil partnership
  • outright gifts (IHTM14211) are read as including cases where after the termination the property ceases to be settled property, and
  • property settled by the gift are read as including cases where the property continues to be settled property after the termination.

The result is that the marriage or civil partnership gift exemption can apply on the termination of an interest in possession only where the termination of the interest is in consideration of marriage or civil partnership, and either

  • (if after the termination the property is no longer settled property) the person becoming entitled to it is a party to the marriage or civil partnership (IHTA84/S22(3), or
  • (if after the termination the property continues to be comprised in the same settlement or becomes immediately comprised in another settlement) the beneficiaries or possible beneficiaries under the trusts of that settlement affecting the property are such as to comply with the requirements of IHTA84/S22(4).

For the IHTA84/S22 exemption to apply on the termination of an interest in possession, the person whose interest is terminated should give notice to the trustees stating how much of the marriage or civil partnership exemption is available. Procedure and practice are the same as for the annual exemption (IHTM14170).