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HMRC internal manual

Inheritance Tax Manual

Employee benefit trusts: dispositions by close companies: charge on participators: general

When a close company (IHTM42955) makes a transfer of value (IHTM04024) to an employee benefit trust an Inheritance Tax charge arises under IHTM84/S94 unless, the disposition:

  • is not a transfer of value under sections IHTA84/S10 (IHTM42957), IHTA84/S12 (IHTM42958) or IHTA84/S13 (IHTM42960), or
  • is eligible for relief.

The transfer of value is apportioned between the individual participators according to their respective rights and interests in the company immediately before the contribution to the employee benefit trust is made (IHTM04068).

The liability for the charge to Inheritance Tax is explained at IHTM30124. Guidance on the due dates for the payment of tax is at IHTM30153.