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HMRC internal manual

Inheritance Tax Manual

HM Revenue & Customs
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Lifetime transfers: transfers by close companies: transfers of value

When a close company makes a transfer of value, tax is charged as if

  • each individual participator (IHTM14851) had made a transfer of value of
  • the amount apportioned to them

by reference to their rights and interests in the company immediately before the transfer.


A company has issued share capital of 100 £1 Ordinary Shares, of which 50 are owned by Xavier and 50 are owned by Yasmin. The company makes a gift of £500,000 to trustees for the benefit of Xavier’s and Yasmin’s respective children. Each of the two participators, Xavier and Yasmin, is treated as having made a transfer of £250,000.

If the company is paying the tax, the amount to be apportioned to each participator is grossed up. IHTA84/S202 explains where the liability for payment of the tax falls for a transfer by a close company (IHTM30124).

IHTA84/S10 can apply to company dispositions just as it can to individuals if the conditions are met. See IHTM04161 for further details.