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HMRC internal manual

Inheritance Tax Manual

Lifetime transfers: transfers by close companies: exemptions

Any transfer by a close company is a deemed transfer (IHTM04061) for Inheritance Tax purposes and is not a potentially exempt transfer (IHTM04057), but

  • the annual exemption (IHTM14141) is available as the restriction in IHTA84/S19(5) to deemed transfers of value does not extend to transfers under IHTA84/S95(5).

as is

  • spouse or civil partner exemption (IHTM11031) to the extent that the estate of the spouse or civil partner of a participator is increased.

The exemptions for

  • small gifts (IHTM14180),
  • normal expenditure out of income (IHTM14231), and
  • gifts in consideration of marriage or civil partnership (IHTM14191)

are not available since they cannot apply to deemed transfers.