Exempt transfers

By Tolley

The following Trusts and Inheritance Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Exempt transfers
  • Exempt transfers
  • Mature PETs
  • Transfers between spouses or civil partners (the spouse exemption)
  • Annual exemption
  • Small gifts
  • Normal expenditure out of income
  • Gifts in consideration of marriage
  • Gifts to charities or registered clubs (the charity exemption)
  • Gifts to political parties (the political party exemption)
  • Gifts to housing associations
  • Gifts for national purposes
  • Maintenance funds for historic buildings
  • Employee trusts

This note will explain when transfers are exempt. However, it should be noted that some exemptions do not apply in relation to the estate charge on death.

Exempt transfers
Total exemption

A transfer is exempt from IHT where it is:

A potentially exempt transfer (PET) which is made seven years or more before deathIHTA 1984, s 3A(4)
To a spouse or civil partner who is domiciled in the UKIHTA 1984, s 18
Classified as a small giftIHTA 1984, s 20
Classified as normal expenditure out of incomeIHTA 1984, s 21
A gift to a charity or registered clubIHTA 1984, s 23
A gift to a political partyIHTA 1984, s 24

More on The charge to IHT: