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HMRC internal manual

Inheritance Tax Manual

Property redirected to a charity: requirement to notify IoV to charity

FB12/Sch1A/Para 9 makes provision to insert two new sub-sections (3A and 3B) to IHTA/S142. The new sub-sections are to apply where the deceased died on or after 6 April 2012.

The instructions below set out the position on the basis that the draft legislation is passed into law unchanged. If you are dealing with a case before the Bill receives Royal Assent, you should invite the taxpayer to provide evidence that complies with the new provisions. Should they refuse to do so, you may allow the charity exemption provisionally but mark the case for review once Royal Assent has been given.

IHTA/S142(3A) has the effect that a redirection of property to charity made by an Instrument of Variation (IoV) is not to be treated as if it had been made by the deceased unless it is shown that the existence of the variation has been notified to the appropriate person. The appropriate person is defined in IHTA/S142(3B) as either

  • the charity or registered club to which the redirected property is to be given, or
  • in the case where the redirection is to the trustees of a charitable trust, the trustees of that trust.

You should have regard to IHTM11129 when deciding whether or not a trust qualifies for charity exemption.

This does not impose a requirement for the charity or the trustees to be a party to the IoV, but the taxpayer must provide evidence that the charity or the trustees are aware of fact that property is to be redirected to them. Copies of an exchange of letters between the parties involved that show the charity or the trustees are aware of the arrangements will be sufficient.