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HMRC internal manual

Inheritance Tax Manual

From
HM Revenue & Customs
Updated
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Orders under the Inheritance (Provision for Family and Dependants Act) 1975: orders under s.10 I(PFD)A 1975

S.10 I(PFD)A 1975 applies where the deceased has within six years of death made gifts or other dispositions with the intention of defeating a claim made under the Act. The section gives the court power to order the donee to provide money or other property for the purpose of an order under the Act to the extent of the benefit (net of IHT) conferred on the donee by the disposition. The court order may apply to the whole or part of that net benefit.

The IHT adjustments consequential on a s.10 order are provided by IHTA84/S146 (2), (3) and (5). Where the s.10 order applies to the whole of the net benefit to the donee

  • the money or other property the donee has to provide under the terms of the order is treated as part of the deceased’s IHT death estate, IHTA84/S.146(2)(b) and
  • if the gift or other disposition was a chargeable transfer and the personal representatives make a claim, in writing, signed by the claimant and supported by a copy of the relevant order

    • no tax is payable on the value transferred by the chargeable transfer or, if tax and interest has been paid, it is repayable to the personal representatives (no matter who paid it). Any tax and interest so repaid is treated as part of the deceased’s IHT death estate, IHTA84/S146 (2)(a)(i), (5) & (7) and
    • the rate at which tax is charged on the deceased’s death estate is calculated without regard to the value transferred by the chargeable transfer, IHTA84/S146 (2)(a)(ii).

Two of these provisions increase the deceased’s IHT death estate by the addition of money, other property or tax repayments.

These additions will be taxed at death rates or exempted depending on the destination of the estate under the deceased’s will or intestacy as varied by the court order. If the additions increase the IHT on the death estate and at the time they become known to us we have already issued a IHTA84/S239 (2) certificate, (IHTM40010) refer the case to your manager.

Where the amount ordered to be provided under s.10 is less than the maximum, IHTA84/S146 (2) operates on appropriately scaled down sums.

A repayment of lifetime tax under IHTA84/S146 (2) carries interest from the date of the claim by the personal representatives, IHTA84/S236 (3).