Property at more than one title: introduction
In most cases you will have to apply the partly exempt transfer rules to property devolving under the deceas
ed’s Will (IHTM12041) or intestacy (IHTM12101). But a person’s estate (IHTM04029) for Inheritance Tax often includes property which does not devolve under the Will or intestacy. For example, settled property (IHTM16000) and joint property (IHTM15011) passing by survivorship (IHTM15081). It may also include part of the free estate, such as foreign property devolving under the law of the country in which it is situated. In cases of this type, the rules for calculating the chargeable estate for partly exempt transfers contained in IHTA84/S36 to S39A are governed by IHTA84/S40.
IHTA84/S40 provides that where gifts take effect separately out of different funds IHTA84/SS36 to 39A apply separately to the gifts taking effect out of each fund with the necessary adjustments to values and amounts
Essentially, what IHTA84/S40 means is that, if you have a partly exempt transfer on a death but the IHT estate includes property at more than one title (for example, free estate and settled property), you should look at each title in isolation and identify the title where the partial exemption occurs. When you have done this you should apply the rules for partly exempt transfers to that title only.
Very occasionally you may have partly exempt transfers at more than one separate title on the same death. You then apply the rules separately to each title.
The following pages of this section explain the application of IHTA84/S40 in more detail. Where the application of IHTA84/S40 causes problems which are not covered in the instructions you should refer the case to Technical.
(This content has been withheld because of exemptions in the Freedom of Information Act 2000)