Inheritance Tax Act 1984

33 Amount of charge under section 32. U.K.

(1) Tax chargeable in respect of any property under section 32 [F1 or 32A] above by reference to a chargeable event shall be charged—

(a) on an amount equal to the value of the property at the time of the chargeable event; and

(b) at the following rate or rates—

(i) if the relevant person is alive, the rate or rates that would be applicable to that amount [F2 in accordance with section 7(2) above] if it were the value transferred by a chargeable transfer made by the relevant person at that time;

(ii) if the relevant person is dead, the rate or rates that would have applied to that amount [F3 in accordance with the appropriate provision of section 7 above] if it had been added to the value transferred on his death and had formed the highest part of that value.

[F4 (2) For the purposes of subsection (1)(b)(ii) above the appropriate provision of section 7 above is—

(a) if the conditionally exempt transfer by the relevant person was made on death (but the property was not treated as forming part of his estate immediately before his death only by virtue of section 102(3) of the Finance Act 1986), subsection (1) of section 7; and

(b) in any other case, subsection (2) of section 7.

[F5 (2ZA) In determining for the purposes of subsection (1)(b)(ii) the rate or rates that would have applied in accordance with subsection (1) of section 7, the effect of Schedule 1A (if it would have applied) is to be disregarded.]

(2A) The rate or rates of tax determined under subsection (1)(b)(i) above in respect of any chargeable event shall not be affected by the death of the relevant person after that event.]

(3) Where the chargeable event is a disposal on sale and the sale—

(a) was not intended to confer any gratuitous benefit on any person, and

(b) was either a transaction at arm’s length between persons not connected with each other or a transaction such as might be expected to be made at arm’s length between persons not connected with each other,

the value of the property at the time of the chargeable event shall be taken for the purposes of subsection (1)(a) above to be equal to the proceeds of the sale.

(4) Where by virtue of section 30(4) above the conditionally exempt transfer extended only to part of the property, the amount mentioned in subsection (1)(a) above shall be proportionately reduced.

(5) The relevant person in relation to a chargeable event in respect of any property is—

(a) if there has been only one conditionally exempt transfer of the property before the event, the person who made that transfer;

(b) if there have been two or more such transfers and the last was before, or only one of them was within, the period of thirty years ending with the event, the person who made the last of those transfers;

(c) if there have been two or more such transfers within that period, the person who made whichever of those transfers the Board may select.

(6) The conditionally exempt transfers to be taken into account for the purpose of subsection (5) above in relation to a chargeable event do not include transfers made before any previous chargeable event in respect of the same property or before any event which apart from [F6 section 32(4) or (4A)] above would have been such a chargeable event [F7 or, where the property has been disposed of as mentioned in [F8 section 32A(5) or (5A)] above, before any event which apart from [F8 section 32A(5) or (5A)] would have been such a chargeable event]

(7) [F9 Subject to subsection (8) below], where after a conditionally exempt transfer of any property there is a chargeable transfer the value transferred by which is wholly or partly attributable to that property, any tax charged on that value so far as attributable to that property shall be allowed as a credit—

(a) if the chargeable transfer is a chargeable event with respect to the property, against the tax chargeable in accordance with this section by reference to that event;

(b) if the chargeable transfer is not such a chargeable event, against the tax chargeable in accordance with this section by reference to the next chargeable event with respect to the property.

[F10 (8) Where after a conditionally exempt transfer of any property there is a potentially exempt transfer the value transferred by which is wholly or partly attributable to that property and either—

(a) the potentially exempt transfer is a chargeable event with respect to the property, or

(b) after the potentially exempt transfer, but before the death of the person who is the transferor in relation to the potentially exempt transfer, a chargeable event occurs with respect to the property,

the tax charged in accordance with this section by reference to that chargeable event shall be allowed as a credit against any tax which may become chargeable, by reason of the potentially exempt transfer proving to be a chargeable transfer, on so much of the value transferred by that transfer as is attributable to the property; and subsection (7) above shall not apply with respect to any tax so becoming chargeable.]

Textual Amendments

F1 Finance Act 1985 Sch. 26 para. 5,in relation to events occurring after 18March 1985.

F2 Finance Act 1986 Sch. 19 para. 11(1)(a),with effect from 18March 1986.Originally

“under the second Table in Schedule 1 to this Act”.

F3 Finance Act 1986 Sch. 19 para. 11(1)(b),with effect from 18March 1986.Originally

“under the appropriate Table”.

F4 Finance Act 1986 Sch. 19 para. 11(2),with effect from 18March 1986.Originally

“(2) For the purposes of subsection (1)(b)(ii) above the appropriate Table is, if the conditionally exempt transfer by the relevant person was made on death, the first Table in Schedule 1 to this Act and, if not, the second Table”.

F5 S. 33(2ZA) inserted (with effect in accordance with Sch. 33 para. 10(1) of the amending Act) by Finance Act 2012 (c. 14), Sch. 33 para. 4

F6 Words in s. 33(6) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 14 para. 31(a)

F7 Finance Act 1985 Sch. 26 para. 6,in relation to events occurring after 18March 1985.

F8 Words in s. 33(6) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 14 para. 31(b)

F9 Finance Act 1986 Sch. 19 para. 11(3),with effect from 18March 1986.

F10 Finance Act 1986 Sch. 19 para. 11(4),in relation to chargeable events in respect of potentially exempt transfers made on or after 18March 1986.