IHTM04024 - Structure of the charge: what is a transfer of value?

A transfer of value is a disposition (IHTM04023) made by a person as a result of which the value of their estate has decreased. All lifetime transfers must start with a disposition. Charges arising on death and on settled property where a qualifying interest in possession exists (IHTM16062) are deemed transfers of value.

A transfer of value may only qualify as a potentially exempt transfer (IHTM04057) to the extent that it would, apart from IHTA84/S3A, be a chargeable transfer. This means that a transfer of value may be partly an exempt transfer (IHTM04026) and partly a potentially exempt transfer.

For example, Alison gives Belinda 拢10,000. As it is Alison鈥檚 first transfer of value in the tax year the annual exemption (IHTM14141) of 拢3,000 is available. So the gift is

  • an exempt transfer of 拢3,000, and as it would, apart from IHTA84/S3A, be a chargeable transfer, it is
  • a potentially exempt transfer of 拢7,000.