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D3a. Payment of IHT

IHT: 6 months or end of April

"(1)     Except as otherwise provided by the following provisions of this Part of this Act, the tax on the value transferred by a chargeable transfer shall be due six months after the end of the month in which the chargeable transfer is made or, in the case of a transfer made after 5th April and before 1st October in any year otherwise than on death, at the end of April in the next year." (IHTA 1984, s.226(1))

IHT: 6 months or end of April

Personal representatives to pay tax they are liable for on delivery of account

 

"(2)     Personal representatives shall, on delivery of their account, pay all the tax for which they are liable and may, on delivery of that account, also pay any part of the tax chargeable on the death for which they are not liable, if the persons liable for it request them to make the payment." (IHTA 1984, s.226(2))

Personal representatives to pay tax they are liable for on delivery of account​

Additional tax on lifetime chargeable transfer and failed PET due within 6 months of death month

 

"(3)     So much of the tax chargeable on the value transferred by a chargeable transfer made within seven years of the death of the transferor as—

(a)     exceeds what it would have been had the transferor died more than seven years after the transfer, 

shall be due six months after the end of the month in which the death occurs.

(3A)     Without prejudice to subsection (3) above, the tax chargeable on the value transferred by a potentially exempt transfer which proves to be a chargeable transfer shall be due six months after the end of the month in which the transferor's death occurs.

(3B)     So much (if any) of the tax chargeable on the value transferred by a chargeable transfer made under Chapter III of Part III of this Act within the period of seven years ending with the settlor's death as exceeds what it would have been had the settlor died more than seven years after the date of the transfer shall be due six months after the end of the month in which the death occurs." (IHTA 1984, s.226(3) - (3B))

Additional tax on lifetime chargeable transfer and failed PET due within 6 months of death month

IHT on trust events: within 6 months of chargeable transfer

 

"(3C)     Tax chargeable under Chapter 3 of Part 3 of this Act on the value transferred by a chargeable transfer, other than any for which the due date is given by subsection (3B) above, is due six months after the end of the month in which the chargeable transfer is made." (IHTA 1984, s.226(3C))

IHT on trust events: within 6 months of chargeable transfer

Conditionally exempt transfers and trees/underwood

 

"(4)     Tax chargeable under section 32, 32A, 79 or 126 above or under Schedule 5 to this Act shall be due six months after the end of the month in which the event by reason of which it is chargeable occurs." (IHTA 1984, s.226(4))

Conditionally exempt transfers and trees/underwood

Payment by instalments

Payment by instalments

- Land, shares and businesses

 

"(1)     Where any of the tax payable on the value transferred by a chargeable transfer is attributable to the value of qualifying property and—

(a)     the transfer is made on death, or

(b)     the tax so attributable is borne by the person benefiting from the transfer, or

(c)     the transfer is made under Part III of this Act and the property concerned continues to be comprised in the settlement,

the tax so attributable may, if the person paying it by notice in writing to the Board so elects, be paid by ten equal yearly instalments.

 

(1A)     Subsection (1) above does not apply to—

(a)     tax payable on the value transferred by a potentially exempt transfer which proves to be a chargeable transfer, or

(b)     additional tax becoming payable on the value transferred by any chargeable transfer by reason of the transferor's death within seven years of the transfer,

except to the extent that the tax is attributable to the value of property which satisfies one of the conditions specified in subsection (1C) below and, in the case of property consisting of unquoted shares or unquoted securities, the further condition specified in section 228(3A) below.

 

(1AA)     In subsection (1A) above, “unquoted”, in relation to any shares or securities, means not listed on a recognised stock exchange.

 

(1B)     In this section “the transferee” means the person whose property the qualifying property became on the transfer or, where on the transfer the qualifying property became comprised in a settlement in which no qualifying interest in possession (within the meaning of Chapter III of Part III of this Act) subsists, the trustees of the settlement.

(1C)     The conditions referred to in subsection (1A) above are—

(a)     that the property was owned by the transferee throughout the period beginning with the date of the chargeable transfer and ending with the death of the transferor (or, if earlier, the death of the transferee), or

(b)     that for the purposes of determining the tax, or additional tax, due by reason of the death of the transferor, the value of the property is reduced in accordance with the provisions of Chapter I or Chapter II of Part V of this Act by virtue of section 113B or section 124B above.

 

(2)     In this section “qualifying property” means—

(a)     land of any description, wherever situated;

(b)     shares or securities to which section 228 below applies;

(c)     a business or an interest in a business.

 

(3)     The first of the instalments referred to in subsection (1) above shall be payable—

(a)     if the chargeable transfer was made on death, six months after the end of the month in which the death occurred, and

(b)     in any other case, at the time when the tax would be due if it were not payable by instalments;

and interest under section 233 below on the unpaid portion of the tax shall be added to each instalment and paid accordingly, except as otherwise provided in section 234 below.

 

(4)     Notwithstanding the making of an election under this section, the tax for the time being unpaid, with interest to the time of payment, may be paid at any time; and if at any time (whether before or after the date when the first instalment is payable) the whole or any part of the property concerned is sold, the tax unpaid (or, in the case of a sale of part, the proportionate part of that tax) shall become payable forthwith (or, if the sale precedes the date when the first instalment is payable, on that date) together with any interest accrued under section 233 below.

 

(5)     References in subsection (4) above to the sale of property shall have effect—

(a)     in a case within subsection (1)(b) above [other than a case within subsection (1A) above where the transferee dies before the transferor]2, as if they included references to any chargeable transfer in which the value transferred is wholly or partly attributable to the value of the property, other than a transfer made on death, and

(b)     in a case within subsection (1)(c) above, as references to the property ceasing to be comprised in the settlement.

 

(6)     For the purposes of subsection (4) above—

(a)     the sale of an interest or part of an interest in a business shall be treated as a sale of part of the business, and

(b)     the payment, under a partnership agreement or otherwise, of a sum in satisfaction of the whole or part of an interest in a business otherwise than on a sale shall be treated as a sale of the interest or part at the time of payment.

 

(7)     For the purposes of this section—

(a)     the value of a business or of an interest in a business shall be taken to be its net value;

(b)     the net value of a business is the value of the assets used in the business (including goodwill) reduced by the aggregate amount of any liabilities incurred for the purposes of the business;

(c)     in ascertaining the net value of an interest in a business, no regard shall be had to assets or liabilities other than those by reference to which the net value of the business would have fallen to be ascertained if the tax had been attributable to the entire business; and

(d)     “business” includes a business carried on in the exercise of a profession or vocation, but does not include a business carried on otherwise than for gain." (IHTA 1984, s.227)

- Land, shares and businesses

- When shares are qualifying property

 

"(1)     This section applies—

(a)     to shares or securities of a company which immediately before the chargeable transfer gave control of the company—

(i)     in the case of a transfer on death, to the deceased,

(ii)     in the case of a transfer under Chapter III of Part III of this Act, to the trustees, and

(iii)     in any other case, to the transferor;

(b)     to shares or securities of a company which do not fall under paragraph (a) above and are unquoted, if the chargeable transfer is made on death and the condition stated in subsection (2) below is satisfied;

(c)     to shares or securities of a company which do not fall under paragraph (a) above and are unquoted, if the Board are satisfied that the tax attributable to their value cannot be paid in one sum without undue hardship (assuming, in the case of a chargeable transfer made otherwise than on death, that the shares or securities would be retained by the persons liable to pay the tax);

(d)     to shares of a company which do not fall under paragraph (a) above and are unquoted, if the conditions stated in subsection (3) below are satisfied.

(2)     The condition mentioned in subsection (1)(b) above is that not less than 20 per cent of so much of the tax chargeable on the value transferred as is tax for which the person paying the tax attributable as mentioned in section 227(1) above is liable (in the same capacity) consists of tax attributable to the value of the shares or securities or such other tax (if any) as may by virtue of section 227 be paid by instalments.

(3)     The conditions mentioned in subsection (1)(d) above are that so much of the value transferred (calculated, if the transfer is not made on death, as if no tax were chargeable on it) as is attributable to the shares exceeds £20,000, and that either—

(a)     the nominal value of the shares is not less than 10 per cent of the nominal value of all the shares of the company at the time of the transfer, or

(b)     the shares are ordinary shares and their nominal value is not less than 10 per cent of the nominal value of all ordinary shares of the company at that time.

(3A)     The further condition referred to in section 227(1A) above is that the shares or securities remained unquoted throughout the period beginning with the date of the chargeable transfer and ending with the death of the transferor (or, if earlier, the death of the transferee).

(4)     In this section “ordinary shares” means shares which carry either—

(a)     a right to dividends not restricted to dividends at a fixed rate, or

(b)     a right to conversion into shares carrying such a right as is mentioned in paragraph (a) above.

(5)     In this section “unquoted”, in relation to any shares or securities, means not listed on a recognised stock exchange." (IHTA 1984, s.228)

- When shares are qualifying property

- Woodlands

 

"Tax chargeable on such a chargeable transfer as is mentioned in section 129 above may, if the person paying the tax by notice in writing to the Board so elects, be paid by ten equal yearly instalments, of which the first shall be payable six months after the end of the month in which the transfer is made." (IHTA 1984, s.229)

- Woodlands

- Interest on tax paid by instalments

 

See s.234 and S1: Interest to HMRC

- Interest on tax paid by instalments

Acceptance of property in satisfaction of tax

"(1)     The Board may, if they think fit and the Secretary of State agrees, on the application of any person liable to pay tax or interest payable under section 233 below, accept in satisfaction of the whole or any part of it any property to which this section applies.

(2)     This section applies to any such land as may be agreed upon between the Board and the person liable to pay tax.

(3)     This section also applies to any objects which are or have been kept in any building—

(a)     if the Board have determined to accept or have accepted that building in satisfaction or part satisfaction of tax or of estate duty, or

(b)     if the building or any interest in it belongs to Her Majesty in right of the Crown or of the Duchy of Lancaster, or belongs to the Duchy of Cornwall or belongs to a Government department or is held for the purposes of a Government department, or

(c)     if the building is one of which the Secretary of State is guardian under the Ancient Monuments and Archaeological Areas Act 1979 or of which the Department of the Environment for Northern Ireland is guardian under the Historic Monuments and Archaeological Objects (Northern Ireland) Order 1995, or

(d)     if the building belongs to any body within Schedule 3 to this Act,

in any case where it appears to the Secretary of State desirable for the objects to remain associated with the building.

(4)     This section also applies to—

(a)     any picture, print, book, manuscript, work of art, scientific object or other thing which the Secretary of State is satisfied is pre-eminent for its national, scientific, historic or artistic interest, and

(b)     any collection or group of pictures, prints, books, manuscripts, works of art, scientific objects or other things if the Secretary of State is satisfied that the collection or group, taken as a whole, is pre-eminent for its national, scientific, historic or artistic interest.

(5)     In this section—

“national interest” includes interest within any part of the United Kingdom;

and in determining under subsection (4) above whether an object or collection or group of objects is pre-eminent, regard shall be had to any significant association of the object, collection or group with a particular place.

(6)     The functions of the Ministers under this section in relation to the acceptance, in satisfaction of tax, of property in which there is a Scottish interest may be exercised separately.

(7)     For the purposes of subsection (6) a Scottish interest in the property exists—

(a)     where the property is located in Scotland; or

(b)     the person liable to pay the tax has expressed a wish or imposed a condition on his offer of the property in satisfaction of tax that it be displayed in Scotland or disposed of or transferred to a body or institution in Scotland." (IHTA 1984, s.230)

"(1)     Where a person has power to sell any property in order to raise money for the payment of tax, he may agree with the Board for the property to be accepted in satisfaction of that tax in pursuance of section 230 above; and, except as regards the nature of the consideration and its receipt and application, any such agreement shall be subject to the same provisions and shall be treated for all purposes as a sale made in the exercise of the said power, and any conveyance or transfer made or purporting to be made to give effect to such an agreement shall have effect accordingly.

(2)     The references in subsection (1) above to tax include references to interest payable under section 233 below.

(3)     This section shall not affect paragraph 1(4) or 3(4) of Schedule 5 to this Act." (IHTA 1984, s.231)

Court to provide for payment of tax out of property under its control

 

"Where proceedings are pending in any court for the administration of any property to the value of which any tax charged on the value transferred by a chargeable transfer is attributable, the court shall provide, out of any such property in the possession or control of the court, for the payment of any of the tax so attributable, or interest on it, which remains unpaid." (IHTA 1984, s.232)

Acceptance of property in satisfaction of tax
Court to provide for payment of tax out of property under its control

Automatic charge for unpaid IHT


See U3: Security for direct tax

Automatic charge for unpaid IHT

Certificate of discharge

 

"(1)     Where application is made to the Board by a person liable for any tax on the value transferred by a chargeable transfer which is attributable to the value of property specified in the application, the Board, on being satisfied that the tax so attributable has been or will be paid, may give a certificate to that effect, and shall do so if the chargeable transfer is one made on death or the transferor has died.

(2)     Where tax is or may be chargeable on the value transferred by a transfer of value and—

(a)     application is made to the Board after the expiration of two years from the transfer (or, if the Board think fit to entertain the application, at an earlier time) by a person who is or might be liable for the whole or part of the tax, and

(b)     the applicant delivers to the Board, if the transfer is one made on death, a full statement to the best of his knowledge and belief of all property included in the estate of the deceased immediately before his death and, in any other case, a full and proper account under this Part of this Act,

the Board may, as the case requires, determine the amount of the tax or determine that no tax is chargeable; and subject to the payment of any tax so determined to be chargeable the Board may give a certificate of their determination, and shall do so if the transfer of value is one made on death or the transferor has died.

(2A)     An application under subsection (1) or (2) above with respect to tax which is or may become chargeable on the value transferred by a potentially exempt transfer may not be made before the expiration of two years from the death of the transferor (except where the Board think fit to entertain the application at an earlier time after the death).

(3)     Subject to subsection (4) below,—

(a)     a certificate under subsection (1) above shall discharge the property shown in it from the Inland Revenue charge on its acquisition by a purchaser, and

(b)     a certificate under subsection (2) above shall discharge all persons from any further claim for the tax on the value transferred by the chargeable transfer concerned and extinguish any Inland Revenue charge for that tax.

(4)     A certificate under this section shall not discharge any person from tax in case of fraud or failure to disclose material facts and shall not affect any further tax—

(a)     that may afterwards be shown to be payable by virtue of section 93, 142, 143, 144 or 145 above,

(aa)     that may afterwards be shown to be payable by reason of too great an increase having been made under section 8A(3) above, or

(b)     that may be payable if any further property is afterwards shown to have been included in the estate of a deceased person immediately before his death;

but in so far as the certificate shows any tax to be attributable to the value of any property it shall remain valid in favour of a purchaser of that property without notice of any fact invalidating the certificate.

(5)     References in this section to a transfer of value, or to the value transferred by a transfer of value, shall be construed as including references to an occasion on which tax is chargeable under Chapter III of Part III of this Act (apart from section 79) or to the amount on which tax is then chargeable." (IHTA 1984, s.239)

Certificate of discharge

PERSONS LIABLE

PERSONS LIABLE

General

General

- More than one person liable: each liable for whole unless otherwise provided

 

"Except as otherwise provided, where under this Act two or more persons are liable for the same tax, each of them shall be liable for the whole of it." (IHTA 1984, s.205)

- More than one person liable: each liable for whole unless otherwise provided

- Right of non-transferors to recover out of property

 

"(1) Where a person is liable, otherwise than as transferor, and otherwise than under section 203 above, for tax attributable to the value of any property he shall, for the purpose of paying the tax or raising the amount of it when paid, have power, whether or not the property is vested in him, to raise the amount of the tax by sale or mortgage of, or a terminable charge on, that property or any part of it.

(2) A person having a limited interest in any property who pays the tax attributable to the value of that property shall be entitled to the like charge as if the tax so attributable had been raised by means of a mortgage to him.

(3) Any money held on the trusts of a settlement may be expended in paying the tax attributable to the value of any property comprised in the settlement and held on the same trusts.

(4) References in this section to tax include references to interest on tax and to costs properly incurred in respect of tax." (IHTA 1984, s.212)

- Right of non-transferors to recover out of property

- Recovery by payer from person with primary may be liability limited to instalments

 

"Where a person has paid to the Board any tax which is or might at his option have been payable by instalments and he is entitled to recover the whole or part of it from another person, that other person shall, unless otherwise agreed between them, be entitled to refund the tax or that part by the same instalments (with the same interest thereon) as those by which it might have been paid to the Board." (IHTA 1984, s.213)

- Recovery by payer from person with primary may be liability limited to instalments

Actual transfer - tax when transfer is made

Actual transfer - tax when transfer is made

- Transferor, recipient, person in whom property becomes vested, beneficiaries of trust

 

"(1) The persons liable for the tax on the value transferred by a chargeable transfer made by a disposition (including any omission treated as a disposition under section 3(3) above) of the transferor are—

(a) the transferor;

(b) any person the value of whose estate is increased by the transfer;

(c) so far as the tax is attributable to the value of any property, any person in whom the property is vested (whether beneficially or otherwise) at any time after the transfer, or who at any such time is beneficially entitled to an interest in possession in the property;

(d) where by the chargeable transfer any property becomes comprised in a settlement, any person for whose benefit any of the property or income from it is applied." (IHTA 1984, s.199(1))

- Transferor, recipient, person in whom property is vested, beneficiaries of trust

- Transferor primarily liable

 

"(6) Where a person is liable for any tax—

(a) under section 199 above otherwise than as transferor or personal representative of the transferor, or

(b) under section 201 above otherwise than as trustee of the settlement,

he shall be liable only if the tax remains unpaid after it ought to have been paid and, in a case where any part of the value transferred is attributable to the tax on it, shall be liable to no greater extent than he would have been had the value transferred been reduced by the tax remaining unpaid.

- Transferor primarily liable

- Spouse of transferor liable: chargeable transfer and transfer of value to spouse

 

"(1) Where—

(a) a transferor is liable for any tax on the value transferred by a chargeable transfer, and

(b) by another transfer of value made by him on or after 27th March 1974 (“the spouse or civil partner transfer”) any property became the property of a person (“the transferee”) who at the time of both transfers was his spouse or civil partner,

the transferee is liable for so much of the tax as does not exceed the market value of the property at the time of the spouse or civil partner transfer or, in a case where subsection (2) below applies the lower market value mentioned in paragraph (c) of that subsection.

(2) This subsection applies where—

(a) the chargeable transfer is made after the spouse or civil partner transfer; and

(b) the property (“the transferred property”) which became the property of the transferee either remains the transferee's property at the date of the chargeable transfer or has before that date been sold by the transferee by a qualifying sale; and

(c) the market value of the transferred property on the relevant date (that is to say, the date of the chargeable transfer or, as the case may be, of the qualifying sale) is lower than its market value at the time of the spouse transfer; and

(d) the transferred property is not tangible movable property.

(3) In this section “qualifying sale” has the same meaning as in section 131 above; and, subject to subsection (4) below, sections 133 to 140 above shall have effect for the purposes of this section as they have effect for the purposes of section 131.

(4) In their application by virtue of subsection (3) above, sections 133 to 140 above shall have effect as if—

(a) references to the chargeable transfer were references to the spouse or civil partner transfer,

(b) references to the transferee's spouse or civil partner were omitted, and

(c) references to section 131 above were references to this section."

Immaterial whether transfer of value to spouse is before or after chargeable transfer

"...the spouse or civil partner (IHTM11032) acquired property from the transferor under a transfer of value (termed the ‘spouse or civil partner transfer’) made on or after 17 March 1974 (it is immaterial whether that transfer of value is before or after the transfer of value for which the transferor is liable, or before or after the end of 1984)" (IHTM30073)

- Spouse of transferor liable: chargeable transfer and transfer of value to spouse

- "Property" includes any property directly or indirectly representing it

 

"(5) References in this section to any property include references to any property directly or indirectly representing it." (IHTA 1984, s.199(5))

- "Property" includes any property directly or indirectly representing it

- Possessors, intermeddlers and managers of property are persons in whom property is vested

 

"(4) For the purposes of this section—

(a) any person who takes possession of or intermeddles with, or otherwise acts in relation to, property so as to become liable as executor or trustee (or, in Scotland, any person who intromits with property or has become liable as a vitious intromitter), and

(b) any person to whom the management of property is entrusted on behalf of a person not of full legal capacity,

shall be treated as a person in whom the property is vested." (IHTA 1984, s.199(4))

- Possessors, intermeddlers and managers of property are persons in whom property is vested

- Purchaser in whom property becomes vested not liable unless property subject to HMRC charge

 

"(3) A purchaser of property, and a person deriving title from or under such a purchaser, shall not by virtue of subsection (1)(c) above be liable for tax attributable to the value of the property unless the property is subject to an Inland Revenue charge." (IHTA 1984, s.199(3))

- Purchaser not liable unless property subject to HMRC charge

Actual transfer - PET/chargeable transfer where transferor does not survive 7 years
 

Actual transfer - PET/chargeable transfer where transferor does not survive 7 years

- Same as actual transfer, tax when made, but with substitution of personal representative for transferor

 

"(1) The persons liable for the tax on the value transferred by a chargeable transfer made by a disposition (including any omission treated as a disposition under section 3(3) above) of the transferor are—

(a) the transferor;

(b) any person the value of whose estate is increased by the transfer;

(c) so far as the tax is attributable to the value of any property, any person in whom the property is vested (whether beneficially or otherwise) at any time after the transfer, or who at any such time is beneficially entitled to an interest in possession in the property;

(d) where by the chargeable transfer any property becomes comprised in a settlement, any person for whose benefit any of the property or income from it is applied.

(2) Subsection (1)(a) above shall apply in relation to—

(a) the tax on the value transferred by a potentially exempt transfer; and

(b) so much of the tax on the value transferred by any other chargeable transfer made within seven years of the transferor's death as exceeds what it would have been had the transferor died more than seven years after the transfer,

with the substitution for the reference to the transferor of a reference to his personal representatives." (IHTA 1984, s.199(1), (2))

- Same as actual transfer, tax when made, but with substitution of personal representative for transferor

Transfer on death
 

Transfer on death

- Personal representative, trustees, person in whom property becomes vested, beneficiaries 

 

"(1) The persons liable for the tax on the value transferred by a chargeable transfer made (under section 4 above) on the death of any person are1 …—

(a) so far as the tax is attributable to the value of property which either—

(i) was not immediately before the death comprised in a settlement, or

(ii) was so comprised and consists of land in the United Kingdom which devolves upon or vests in the deceased's personal representatives,

the deceased's personal representatives;

(b) so far as the tax is attributable to the value of property which, immediately before the death, was comprised in a settlement, the trustees of the settlement;

(c) so far as the tax is attributable to the value of any property, any person in whom the property is vested (whether beneficially or otherwise) at any time after the death, or who at any such time is beneficially entitled to an interest in possession in the property;

(d) so far as the tax is attributable to the value of any property which, immediately before the death, was comprised in a settlement, any person for whose benefit any of the property or income from it is applied after the death." (IHTA 1984, s.200)

- Personal representative, trustees, person in whom property becomes vested, beneficiaries 

- Purchaser in whom property becomes vested not liable unless property subject to HMRC charge

 

"(2) A purchaser of property, and a person deriving title from or under such a purchaser, shall not by virtue of subsection (1)(c) above be liable for tax attributable to the value of the property unless the property is subject to an Inland Revenue charge." (IHTA 1984, s.200(2))

- Purchaser in whom property becomes vested not liable unless property subject to HMRC charge

- Person entitled to part of income treated as entitled to interest in whole property

 

"(3) For the purposes of subsection (1) above a person entitled to part only of the income of any property shall, notwithstanding anything in section 50 above, be deemed to be entitled to an interest in the whole of the property." (IHTA 1984, s.200(3))

- Person entitled to part of income treated as entitled to interest in whole property

- "Property" includes any property directly or indirectly representing it

 

"(5) References in this section to any property include references to any property directly or indirectly representing it." (IHTA 1984, s.199(5))

"(4) Subsections (4) and (5) of section 199 above shall have effect for the purposes of this section as they have effect for the purposes of that section." (IHTA 1984, s.200(4))

- "Property" includes any property directly or indirectly representing it

- Possessors, intermeddlers and managers of property are persons in whom property is vested

 

"(4) For the purposes of this section—

(a) any person who takes possession of or intermeddles with, or otherwise acts in relation to, property so as to become liable as executor or trustee (or, in Scotland, any person who intromits with property or has become liable as a vitious intromitter), and

(b) any person to whom the management of property is entrusted on behalf of a person not of full legal capacity,

shall be treated as a person in whom the property is vested." (IHTA 1984, s.199(4))

"(4) Subsections (4) and (5) of section 199 above shall have effect for the purposes of this section as they have effect for the purposes of that section." (IHTA 1984, s.200(4))

- Possessors, intermeddlers and managers of property are persons in whom property is vested

Trusts - relevant property regime charges
 

Trusts - relevant property regime charges

- Trustees, IIP beneficiaries, person for whom property/income is applied, settlor (if alive and trustees not UK resident)

 

"(1) The persons liable for the tax on the value transferred by a chargeable transfer made under Part III of this Act are—

(a) the trustees of the settlement;

(b) any person entitled (whether beneficially or not) to an interest in possession in the settled property;

(c) any person for whose benefit any of the settled property or income from it is applied at or after the time of the transfer;

(d) where the transfer is made during the life of the settlor and the trustees are not for the time being resident in the United Kingdom, the settlor." (IHTA 1984, s.201(1))

- Trustees, IIP beneficiaries, person for whom property/income is applied, settlor (if alive and trustees not UK resident)

- Residence of trustees

 

"(5) For the purposes of this section trustees of a settlement shall be regarded as not resident in the United Kingdom unless the general administration of the settlement is ordinarily carried on in the United Kingdom and the trustees or a majority of them (and, where there is more than one class of trustees, a majority of each class) are for the time being resident in the United Kingdom." (IHTA 1984, s.201(4))

- Limits on liability of settlor

 

"(2) Where the chargeable transfer is made within seven years of the transferor's death but is not a potentially exempt transfer, subsection (1)(d) above shall not apply in relation to so much of the tax as exceeds what it would have been had the transferor died more than seven years after the transfer.

(3) Subsection (1)(d) above shall not apply in relation to a settlement made before 11th December 1974 if the trustees were resident in the United Kingdom when the settlement was made, but have not been resident there at any time during the period between 10th December 1974 and the time of the transfer.

(3A) Subsection (1)(d) above shall not apply in relation to the tax chargeable on the value transferred by a potentially exempt transfer which proves to be a chargeable transfer in a case where the settlement was made before 17th March 1987 if the trustees were resident in the United Kingdom when the settlement was made, but have not been resident there at any time between 16th March 1987 and the death of the transferor." (IHTA 1984, s.201(2) - (3A))

- Limits on liability of settlor

- Multiple settlors: treat as separate settlements

 

"(4) Where more than one person is a settlor in relation to a settlement and the circumstances so require, subsection (1)(d) above shall have effect in relation to it as if the settled property were comprised in separate settlements." (IHTA 1984, s.201(4))

- Tax avoidance relating to acquisition of interests in possession

 

"(4A) Where—

(a) a charge to tax arises under or by virtue of section 74A, or

(b) in a case where paragraphs (a) to (d) of section 74A are satisfied, a charge to tax arises under section 64 or 65 in respect of the relevant settled property (within the meaning of section 74A),

subsection (1) of this section has effect as if the persons listed in that subsection included the individual mentioned in section 74A(1)(b)(i)." (IHTA 1984, s.201(4A))

- Tax avoidance relating to acquisition of interests in possession

- "Property" includes any property directly or indirectly representing it

 

"(6) References in this section to any property include references to any property directly or indirectly representing it." (IHTA 1984, s.201(6))

- "Property" includes any property directly or indirectly representing it

Close company transfers of value
 

Close company transfers of value

- The company, any individual whose estate is increased by the transfer

 

"(1) The persons liable for tax chargeable by virtue of section 94(1) or section 99(2) above are—

(a) the company making the transfer of value concerned, and

(b) so far as the tax remains unpaid after it ought to have been paid, the persons to whom any amounts have been apportioned under section 94 above and any individual (whether such a person or not) the value of whose estate is increased by the company's transfer." (IHTA 1984, s.202(1))

"(4) No person other than those liable under this section shall be liable for any tax chargeable by virtue of section 94(1) or section 99(2) above." (IHTA 1984, s.202(1))

- The company, any individual whose estate is increased by the transfer

- Persons to whom at least 5% of the value transferred is apportioned (to a corresponding extent)

 

"(2) A person to whom not more than 5 per cent of the value transferred by the company's transfer is apportioned shall not as such be liable for any of the tax; and each of the other persons to whom any part of that value has been apportioned shall be so liable only for such part of the tax as corresponds to that part of that value." (IHTA 1984, s.202(2))

- Persons to whom at least 5% of the value transferred is apportioned (to a corresponding extent)

- Liability of individual whose estate increased limited to amount of increase

 

"(3) A person the value of whose estate is increased by the company's transfer shall not as such be liable for a greater amount than the amount of the increase." (IHTA 1984, s.202(3))

- Liability of individual whose estate increased limited to amount of increase
- Multiple settlors: treat as separate settlements
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