Commentary

I3.256 Future payments

IHT, trusts and estates

I3.256 Future payments

I3.256 Future payments

IHTA 1984, s 262 makes express provision for certain transfers of value where the transferor makes subsequent payments or transfers of property under it. Its effect is to cause the transfer of value to be made in instalments corresponding to the payments or transfers instead of there being a single transfer of value at the outset. When introduced1 it probably gave an advantage to the taxpayer where it applied, but it is now likely to be a disadvantage to the taxpayer for it to apply to a potentially exempt transfer (see I3.311–I3.319) because it causes transfers to be effective from a later date than would otherwise be the case.

Calculation of IHT

Where a disposition made for a consideration in money or money's worth is a transfer of value and, in pursuance of it, the transferor makes any payment or transfers any asset more than one year after the disposition, IHT (if any) is charged on each such occasion.

The IHT is computed as though each payment or transfer were made in pursuance of a separate disposition made without consideration at the time of such payment or transfer and as though on each such occasion an amount called the chargeable portion of the payment or transfer were paid or transferred2. Alternatively, as HMRC describes it, the element of bounty in each payment made by the transferor, or each transfer of assets made by him, is to be regarded as a separate disposition and taxed accordingly3.

Despite the use

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