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HMRC internal manual

Inheritance Tax Manual

Pre-owned assets: calculation of the charge on chattels: where the chargeable person contributed to the acquisition of the relevant property

Where the contribution condition (IHTM44008) is met because the chargeable person has contributed directly or indirectly to the acquisition of the chattel, the appropriate amount is found by reference to the proportion of the value of the chattel that can be reasonably attributed to the consideration provided.

Where the contribution is a direct contribution to the acquisition of the property occupied by the chargeable person, the calculation of the appropriate rental value is likely to be as straightforward being the proportion that the contribution bears to the purchase price. Where the contribution is indirect, it may be much more difficult to establish the extent to which the value of the relevant chattel can be reasonably attributed to the contribution made by the chargeable person.


Jane gives her son Tarquin £100,000 and (together with £50,000 of his own money) Tarquin invests the money in quoted shares. After a number of years, Tarquin sells the shares for £300,000 and uses the money to buy some antiques which Jane uses in her home. At first glance, it is not unreasonable to take the view that two thirds of the appropriate amount should be subject to the POA charge. However, the taxpayer may seek to take other factors into account where, say, certain shares that can be identified as purchased with Tarquin’s money have outperformed others, so that a greater proportion of the £300,000 is attributable to the funds Tarquin provided. There can be no hard and fast rule as the legislation refers only to a reasonable attribution, so each case will need to be decided on its own facts.