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HMRC internal manual

Inheritance Tax Manual

Attribution process: lifetime transfers

In May 2000 Terri settles the following property on relevant property trust (IHTM42161), the transferee (IHTM30244) paying the tax

  • £160,000 cash


  • 20,000 shares in XYZ Ltd, an unquoted company (the value is £240,000).

The value transferred by the transfer, which is wholly chargeable, is £400,000.  The part of this value attributable to

  • the shares is (120,000 ÷ 200,000) or 3/5
  • the cash is (80,000 ÷ 200,000) or 2/5.

The part attributable to the shares qualifies for instalments because

  • the transferee is paying the tax
  • the part of the value transferred attributable to the shares exceeds £20,000, and
  • the shares represent more than 10% of the company’s share capital (IHTM30256).

The calculation of the tax immediately payable (there being no previous cumulative total) is:


Value                                                         Lifetime tax

£400,000 transfer                            £33,200             which splits thus:

2/5 attributable to cash                  £13,280              payable in one sum

3/5 attributable to shares              £19,920              payable by instalments. 


The transferor dies in February 2002.  The additional tax on the lifetime transfer is:

Tax at February 2002 full rate                   £63,200

Less tax as above                                              £33,200

Additional tax                                                     £30,000


As the shares are still held by the transferee and remain unquoted at the death, instalments are available for £18,000 - i.e. the 3/5 part of the £30,000 attributable to the shares.