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HMRC internal manual

Inheritance Tax Manual

HM Revenue & Customs
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Liabilities: investigating form IHT419: lifetime transfers on guarantee debt

If no consideration was given in exchange for the guarantee (IHTM28353) any payments made by the deceased before the death should be treated as lifetime transfers to the borrower.

In other cases, where you have allowed a deduction for the deceased’s liability you will need to consider whether the giving of the guarantee was a lifetime transfer. For example, if at the time the deceased gave the guarantee there was little prospect that the borrower would be able to pay the debts then there may be a lifetime transfer approximately equal to the full amount of the liability. If it was likely that at least some of the debt would be repaid then there may still be a transfer of value equivalent to the value of the guarantee less what the borrower could have been expected to repay. In both these cases any lifetime payments by the guarantor are not treated as lifetime transfers.

When considering lifetime transfers you will need to look closely at the circumstances when the agreement was entered into. This usually means that you will need to see details of the borrower’s financial position at that time.

You should refer any case involving guarantee debts where you think that a lifetime transfer might be involved to Technical.