Lifetime transfers: the charge to tax: the charge on lifetime transfers: simultaneous and same day transfers
Where the order of transfers made on the same day affects the value transferred (as where one or some of them have to be grossed up and another or others do not), you treat them as made in the order which results in the lowest value chargeable.
Thus you treat the ones to be grossed up as made first, so as to secure grossing-up (IHTM14593) at a lower rate.
Where grossing does not apply, you calculate the value of the transfers as if they comprised a single transfer of the same total value. This applies whether you know the actual order of the transfers or not.
Gordon, who has made no previous chargeable transfers, makes five chargeable transfers each of £40,000 on the same date.
The tax on each is one fifth of the tax on a single transfer of £200,000.
Both S266(1) and (2) are capable of operating together on gifts made on a single day.
Gordon on the same day makes
- two chargeable transfers on which he bears the tax, and
- three chargeable transfers on which his donees bear the tax.
Under IHTA84/S266 (1), the two transfers will be treated as made before the three. IHTA84/S266 (2) also applies separately to the set of two transfers and the set of three, giving an overall effective rate to each set by treating it as a single transfer of its total value.
These rules do not apply to the transfer on death, so where lifetime gifts are made on the day of a person’s death, you will always treat the lifetime gifts as made first.
Discretionary and non interest in possession settlements
IHTA84/S2 (3) tells you to give the same treatment to chargeable events for settlements without interests in possession (IHTM42070) as you give to chargeable transfers. Accordingly, IHTA84/S266 (1) and (2) automatically apply to such events and to capital distributions made (or treated as made) on the same day from the same settlement (IHTA84S/266 (4)