Incidence of tax on specific gifts

A specific gift, where the term refers to a disposition by Will, is generally understood to be a bequest of a defined asset, such as a gold watch. A pecuniary legacy of a defined amount is also a specific gift. Inheritance tax legislation defines a specific gift negatively as meaning “any gift other than a gift of residue or of a share in residue”. This is somewhat circular since residue is what is left after debts, expenses and legacies have been paid. Nevertheless it is clear that a specific gift is a particular item or quantified amount, whereas a residuary gift is part or all of what is left. If the gift is a share of residue it is defined as a division, fraction, or percentage of an unquantified amount.

Specific gifts include the following:

• •a single personal or household item eg a diamond ring, a painting, a motor vehicle
• •a collection of items eg a stamp collection, all household furniture, a library of books
• •a devise of land and buildings, eg a farm, the deceased’s residence
• •a pecuniary legacy, defined as a fixed amount, eg £20,000
• •a gift of money defined by its origin or a formula, eg “the money in my Yorkshire Building Society account” or “half the proceeds of sale of the Lowry painting”
• •a gift of shares, eg “my shares in Marks and Spencer” or “my share portfolio held by Charles Stanley stockbrokers”
• •property claimed as ‘legal rights’ under the law of Scotland (IHTA 1984, s 42(4))
• •a nil rate band legacy, including a gift of the balance available after taking account of lifetime gifts, eg “the maximum amount which could be