Trusts and Inheritance Tax

Chargeable transfers

Produced by Tolley
  • 10 Jan 2022 15:01

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

  • Chargeable transfers
  • Transfers of value
  • Failure to exercise a right
  • Loss to the donor
  • Related property
  • Transfers of value not liable to inheritance tax
  • Dispositions that are not transfers of value
  • Excluded property
  • Exempt transfers
  • Potentially exempt transfers
  • More...

Chargeable transfers

This guidance note provides an overview of the basic principles of inheritance tax, when it is charged and how it is calculated. It contains links and references to other parts of the module where more details can be found.

Transfers of value

Inheritance tax is based on the concept of a transfer of value. A transfer of value is defined as a ‘disposition made by a person (the transferor) as a result of which the value of his estate immediately after the disposition is less than it would be but for the disposition’. Thus the definition identifies the key event as a ‘disposition’.

A disposition is, typically, a gift. There must be an element of bounty, otherwise the value of the transferor’s estate would not decrease. A disposition can be:

  1. a lifetime gift from one person to another. The gift could be of money or any type of asset, such as a picture, shares, or land

  2. a lifetime gift of property from a person to trustees who will look after the property for the beneficiaries of the trust

  3. a gift with reservation. That is where a person transfers ownership of property but retains rights or benefits from it. For details of the treatment of such gifts, see the Gifts with reservation ― overview guidance note and other notes in that sub-topic

  4. the transfer, when someone dies, of the whole of his property to new owners

  5. a distribution of trust assets to a beneficiary

In addition to occasions when property is actually

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