IHTM04165 - Dispositions not intended to confer bounty: first condition - gift not intended

The first condition in IHTA84/S10 is that the disposition (IHTM04164) was not intended, and was not made in a transaction intended, to confer any gratuitous benefit on any person (IHTM04052). It is necessary for the person claiming that a disposition is within IHTA84/S10 to show that the transferor

  • sought to obtain the full open market price under the transaction, and
  • had no donative intent.

Example 1

Angela puts Blackacre for sale on the open market. Its value is considered to be 拢100,000. Barry, a stranger, starts negotiations to buy. He discovers that Angela needs a quick sale for personal reasons, e.g. because she is emigrating shortly. So Barry offers only 拢82,000, but in cash with an undertaking to complete the purchase very soon. Angela accepts because of her own circumstances. There is no gratuitous intent.

Example 2

Dispositions made on divorce or dissolution of a civil partnership (IHTM11032) for the benefit of a former spouse or civil partner, as a result of arm鈥檚 length negotiations, will not normally give rise to a transfer of value in view of IHTA84/S10. Alternatively, IHTA84/S11(a) (IHTM04173) may apply.

Where the dispositions are made following a Court Order (IHTM11032) under the Matrimonial Causes Act 1973, the decision in Haines v Hill [2007] EWCA Civ 1284 at para 35 confirms that the applicant spouse鈥檚 right to apply for a property order is consideration equal to the value of the money or property that is to be transferred under the Court Order. As a result there is no loss to the respondent spouse鈥檚 estate in the first place and there is no need to rely on any exemption or other exclusion to prevent a transfer of value arising. Consequently, a settlement arising under a Court Order which gives the applicant spouse an interest in possession will be a relevant property trust and the spouse鈥檚 interest in possession will not form part of their estate in view of IHTA84/S49(1A) and IHTA/S5(1B). The same analysis applies to an interest in possession created in compliance with a Court Order under the Children Act 1989.