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HMRC internal manual

Inheritance Tax Manual

HM Revenue & Customs
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Pre-owned assets: excluded transactions: the contribution condition - annual and small gifts exemption

For the purposes of the contribution conditions relating to land and chattels, the contribution to the acquisition of any property is an excluded transaction in relation to the chargeable person if the contribution was an outright gift to another individual and is, for IHT purposes, a transfer of value that is wholly exempt under IHTA84/S19, annual exemption (IHTM14141) or IHTA84/S20 small gifts exemption (IHTM14180), FA04/Sch15/Para 10(2)(e).