Inheritance Tax Act 1984

PART VII U.K. LIABILITY

General rules U.K.

199 Dispositions by transferor. U.K.

(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.

[F1 (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.]

(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.

(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.

(5) References in this section to any property include references to any property directly or indirectly representing it.

Textual Amendments

F1 Finance Act 1986 Sch. 19, para. 26,with effect from 18March 1986.Originally

“(2) Where the chargeable transfer is made within three years of the transferor's death, subsection (1)(a) 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 three years after the transfer.”.

200 Transfer on death. U.K.

(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 are F2 . . . —

(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.

[F3 (1A) F4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

(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.

(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.

(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.

Textual Amendments

F2 Words in s. 200(1) omitted (with effect as mentioned in Sch. 16 paras. 85, 106 of the amending Act) by virtue of Finance Act 2011 (c. 11), s. 65, Sch. 16 para. 52(a)

F3 S. 200(1A) inserted (6.4.2006) by Finance Act 2006 (c. 25), s. 160, Sch. 22 para. 5(3)

F4 S. 200(1A) omitted (with effect as mentioned in Sch. 16 paras. 85, 106 of the amending Act) by virtue of Finance Act 2011 (c. 11), s. 65, Sch. 16 para. 52(b)

201 Settled property. U.K.

(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.

(2) Where the chargeable transfer is made within [F5 seven years] of the transferor’s death [F6 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 [F5 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.

[F7 (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.]

(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.

[F8 (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).]

(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.

(6) References in this section to any property include references to any property directly or indirectly representing it.

Textual Amendments

F5 Finance Act 1986 Sch. 19, para. 27,with effect from 18 March 1986.Originally “three years”.

F6 Finance Act 1987 (No.2) Sch. 7, para. 3(2),with effect from 17 March 1987.

F7 Finance Act 1987 (No.2) Sch. 7, para. 3(3),with effect from 17 March 1987.

F8 S. 201(4A) inserted (20.6.2012 and with effect in accordance with s. 210(5) of the amending Act) by Finance Act 2012 (c. 14), s. 210(4)

202 Close companies. U.K.

(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.

(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.

(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.

(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.

203 Liability of spouse [F9 or civil partner]. U.K.

(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 [F10 or civil partner] transfer”) any property became the property of a person (“the transferee”) who at the time of both transfers was his spouse [F10 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 [F10 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 [F10 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 [F10 or civil partner] 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 [F10 or civil partner] transfer,

(b) references to the transferee’s spouse [F10 or civil partner] were omitted, and

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

Textual Amendments

F9 Words in s. 203 sidenote inserted (5.12.2005) by virtue of The Tax and Civil Partnership Regulations 2005 (S.I. 2005/3229), regs. 1(1), 36(b)

F10 Words in s. 203(1)(2)(4) inserted (5.12.2005) by The Tax and Civil Partnership Regulations 2005 (S.I. 2005/3229), regs. 1(1), 36(a)

204 Limitation of liability. U.K.

(1) A person shall not be liable under section 200(1)(a) above for any tax as a personal representative of a deceased person, except to the extent of the following assets, namely—

(a) so far as the tax is attributable to the value of any property other than such as is mentioned in paragraph (b) below, the assets (other than property so mentioned) which he has received as personal representative or might have so received but for his own neglect or default; and

(b) so far as the tax is attributable to property which, immediately before the death, was comprised in a settlement and consists of land in the United Kingdom, so much of that property as is at any time available in his hands for the payment of the tax, or might have been so available but for his own neglect or default.

(2) A person shall not be liable for tax as trustee in relation to any property, except to the extent of—

(a) so much of the property as he has actually received or disposed of or as he has become liable to account for to the persons beneficially entitled thereto, and

(b) so much of any other property as is for the time being available in his hands as trustee for the payment of the tax or might have been so available but for his own neglect or default.

(3) A person not liable as mentioned in subsection (1) or (2) above but liable for tax as a person in whom property is vested or liable for tax as a person entitled to a beneficial interest in possession in any property shall not be liable for the tax except to the extent of that property.

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F11

(5) A person liable for tax as a person for whose benefit any settled property, or income from any settled property, is applied, shall not be liable for the tax except to the extent of the amount of the property or income (reduced in the case of income by the amount of any income tax borne by him in respect of it, and in the case of other property in respect of which he has borne income tax by virtue of [F12 Chapter 2 of Part 13 of the Income Tax Act 2007] by the amount of that tax).

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

(a) under section 199 above otherwise than as transferor [F13 or personal representatives 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.

[F14 (7) Where the tax exceeds what it would have been had the transferor died more than seven years after the transfer, subsection (6) above shall not apply in relation to the excess.

(8) A person liable by virtue of section 199(2) above for any tax as personal representative of the transferor shall be liable only to the extent that either—

(a) in consequence of subsections (2), (3) and (5) above, no person falling within paragraphs (b) to (d) of section 199(1) above is liable for the tax, or

(b) the tax remains unpaid twelve months after the end of the month in which the death of the transferor occurs,

and, subject to that, shall be liable only to the extent of the assets mentioned in subsection (1) above.

(9) Where by virtue of subsection (3) of section 102 of the Finance Act 1986 the estate of a deceased person is treated as including property which would not apart from that subsection form part of his estate, a person shall be liable under section 200(1)(a) above as personal representative for tax attributable to the value of that property only if the tax remains unpaid twelve months after the end of the month in which the death occurs and, subject to that, only to the extent of the assets mentioned in subsection (1) above.]

Textual Amendments

F11 Repealed by 1986 s. 101(3), Sch. 19, para. 28(1)and Sch. 23, Part X,with effect from 18March 1986.

F12 Words in s. 204(5) substituted (with effect as mentioned in s. 1034 of the amending Act) by Income Tax Act 2007 (c. 3), ss. 1027, 1034, Sch. 1 para. 270 (with transitional provisions and savings in Sch. 2)

F13 Income and Corporation Act 1986 Sch. 19, para. 28(2),with effect from 18March 1986.

F14 Finance Act 1986 Sch. 19, para. 28(3),with effect from 18March 1986.Originally

“(7) Subsection (6) above shall not apply in relation to such an excess as is mentioned in subsection (4) above.”

205 More than one person liable. U.K.

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.

Special cases U.K.

206 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F15 U.K.

Textual Amendments

F15 Repealed by Finance Act 1988 s. 148and Sch. 14, Part X,with effect from 15March 1988.

207 Conditional exemption, etc. U.K.

(1) Where tax is chargeable under section 32 above on the occurrence of an event which is a chargeable event with respect to any property by virtue of subsection (2) or subsection (3)(a) of that section, the person liable for the tax is the person who, if the property were sold—

(a) in a case within subsection (2) of that section, at the time the tax becomes chargeable, and

(b) in a case within subsection (3)(a), immediately after the death,

would be entitled to receive (whether for his benefit or not) the proceeds of sale or any income arising from them.

(2) Where tax is chargeable under section 32 above on the occurrence of an event which is a chargeable event with respect to any property by virtue of subsection (3)(b) of that section, the person liable for the tax is the person by whom or for whose benefit the property is disposed of.

[F16 (2A) Where tax is chargeable under section 32A above on the occurrence of an event which is a chargeable event with respect to any property by virtue of subsection (3) or subsection (4)(a) of that section, the person liable for the tax is the person who, if the property were sold—

(a) in a case within subsection (3) of that section, at the time the tax becomes chargeable, and

(b) in a case within subsection (4)(a), immediately after the death,

would be entitled to receive (whether for his benefit or not) the proceeds of sale or any income arising from them.

(2B) Where tax is chargeable under section 32A above on the occurrence of an event which is a chargeable event with respect to any property by virtue of subsection (4)(b) of that section, the person liable for the tax is the person by whom or for whose benefit the property is disposed of.]

(3) The persons liable for tax charged under [F17 section 79(3A)] above are—

(a) the trustees of the settlement concerned, and

(b) any person for whose benefit any of the property or income from it is applied at or after the time of the event occasioning the charge.

(4) The person liable for tax chargeable under paragraph 1(1) or 3(1) of Schedule 5 to this Act is the person who, if the property were sold at the time the tax becomes chargeable, would be entitled to receive (whether for his benefit or not) the proceeds of sale or any income arising from them.

(5) The person liable for tax chargeable under paragraph 1(2) or 3(2) of Schedule 5 to this Act is the person by whom or for whose benefit the property is disposed of.

Textual Amendments

F16 Finance Act 1985 Sch. 26, para. 10,in relation to events occurring after 18March 1985.

F17 Words in s. 207(3) substituted (with effect in accordance with s. 12(9) of the amending Act) by Finance (No. 2) Act 2015 (c. 33), s. 12(8)(a)

208 Woodlands. U.K.

The person liable for tax chargeable under section 126 above in relation to a disposal is the person who is entitled to the proceeds of sale or would be so entitled if the dispoal were a sale.

209 Succession in Scotland. U.K.

(1) A person shall not be liable under section 200(1)(a) above for tax attributable to the value of any heritable property in Scotland which is vested in him as executor in the circumstances and for the purposes mentioned in subsection (1) or (2) of section 18 of the M1 Succession (Scotland) Act 1964.

(2) The persons liable for tax chargeable under section 147(4) above are the person who claims legitim [F18 or rights under section 131 of the Civil Partnership Act 2004] and any person mentioned in section 200(1)(c) above.

(3) Section 200(1)(a) shall not apply in relation to tax chargeable under section 147(4) above, but section 204(1) shall apply in relation to the person who claims legitim [F18 or rights under section 131 of the Civil Partnership Act 2004] as it applies in relation to the personal representatives of a deceased person.

Textual Amendments

F18 Words in s. 209(2)(3) inserted (5.12.2005) by The Tax and Civil Partnership Regulations 2005 (S.I. 2005/3229), regs. 1(1), 37

Marginal Citations

M1 1964 c.41.

210 Pension rights, etc. U.K.

[F19 (1)] Where any tax chargeable on a transfer of value is attributable to the value of an interest satisfying the conditions of paragraphs (a) and (b) of section 151(2) above, the persons liable for the tax shall not include the trustees of the scheme or fund concerned but shall, if the transfer is made on the death of the person entitled to the interest, include his personal representatives.

[F20 (2) F21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

[F22 (3) F21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

Textual Amendments

F19 S. 210 renumbered as s. 210(1) (6.4.2006) by Finance Act 2006 (c. 25), s. 160, Sch. 22 para. 6

F20 S. 210(2) inserted (6.4.2006) by Finance Act 2006 (c. 25), s. 160, Sch. 22 para. 6

F21 S. 210(2)(3) omitted (with effect as mentioned in Sch. 16 paras. 85, 106 of the amending Act) by virtue of Finance Act 2011 (c. 11), s. 65, Sch. 16 para. 53

F22 S. 210(3) inserted (with effect as mentioned in Sch. 28 para. 15(3) of the amending Act) by Finance Act 2008 (c. 9), s. 91, Sch. 28 para. 11

Burden of tax, etc. U.K.

211 Burden of tax on death. U.K.

(1) Where personal representatives are liable for tax on the value transferred by chargeable transfer made on death, the tax shall be treated as part of the general testamentary and administration expenses of the estate, but only so far as it is attributable to the value of property in the United Kingdom which—

(a) vests in the deceased’s personal representatives, and

(b) was not immediately before the death comprised in a settlement.

(2) Subsection (1) above shall have effect subject to any contrary intention shown by the deceased in his will.

(3) Where any amount of tax paid by personal representatives on the value transferred by a chargeable transfer made on death does not fall to be borne as part of the general testamentary and administration expenses of the estate, that amount shall, where occasion requires, be repaid to them by the person in whom the property to the value of which the tax is attributable is vested.

(4) References in this section to tax include references to interest on tax.

212 Powers to raise tax. U.K.

(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.

213 Refund by instalments. U.K.

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.

214 Certificates of tax paid. U.K.

(1) On an application being made in such form as the Board may prescribe by a person who has paid or borne the tax attributable to the value of any property, being tax for which he is not ultimately liable, the Board shall grant a certificate specifying the tax paid and the debts and incumbrances allowed in valuing the property.

(2) Except to the extent of any repayment which may be or become due from the Board, a certificate under subsection (1) above shall be conclusive as between any person by whom the tax specified in the certificate falls to be borne and the person seeking to recover the tax from him; and any repayment of the tax falling to be made by the Board shall be duly made if made to the person producing the certificate.

(3) References in this section to tax include references to interest on tax.