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HMRC internal manual

Inheritance Tax Manual

Life Policies: Potentially Exempt Transfer treatment for renewal premiums: payment of premiums for policies gifted to individuals

Under IHTA84/S3A (2)(a) and S3A(2)(b), Potentially Exempt Transfer treatment is available to the extent that the value of the transferee’s estate is increased. Value in this context means the open market value (IHTM20083) and is a matter for the Actuarial Team to consider.

If the amount of the premium paid direct to the insurance company is more than the increase in the value of the policy, the excess will be an immediately chargeable transfer (IHTM04067) (subject to any other available exemptions).