Citation and commencement
1. These Regulations may be cited as the Inheritance Tax (Delivery of Accounts) (Excepted Transfers and Excepted Terminations) Regulations 2008 and shall come into force on 6th April 2008.
Interpretation
2.—(1) In these Regulations—
“the Commissioners” means the Commissioners for Her Majesty’s Revenue and Customs;
“the 1984 Act” means the Inheritance Tax Act 1984;
“the IHT threshold” means the lower limit shown in the Table in Schedule 1 to the 1984 Act applicable in the year in which the chargeable transfer is made by the transferor;
“the net IHT threshold” means the IHT threshold less the aggregate of the values transferred by all previous chargeable transfers made by the transferor during the seven years preceding the chargeable transfer;
“a specified trust” means one of the following—
a trust of settled property where a person became beneficially entitled to an interest in possession before 22nd March 2006;
a trust for a bereaved minor within section 71A(1);
a trust in which there is an immediate post-death interest within section 49A(2);
a trust for a disabled person within section 89, a self-settlement within section 89A(3) or a disabled person’s interest within section 89B;
a trust in which there is a transitional serial interest within sections 49B to 49E(4);
“value” means value for the purpose of tax.
(2) In these Regulations, a reference to a section is a reference to the section of the 1984 Act bearing that number.
Accounts
3.—(1) Save as provided in paragraph (2), no person is required under section 216 to deliver an account of an excepted transfer or an excepted termination unless the Commissioners so require by notice in writing issued to that person.
(2) Paragraph (1) does not apply to—
(a)The duty on trustees to deliver an account under section 216(1)(b) where the transferor dies within seven years of the chargeable transfer;
(b)The duty on trustees and persons to deliver an account under section 216(1)(bb) and (bd)(5).
(3) If any person who has not delivered an account in reliance on paragraph (1) discovers at any time that the transfer is not an excepted transfer, or that the termination is not an excepted termination, the delivery to the Commissioners within six months of that time of an account of that transfer or termination shall satisfy any requirement to deliver an account imposed on that person.
Excepted transfers
4.—(1) For the purposes of regulation 3 an excepted transfer means a chargeable transfer made on or after 6th April 2007 which is a disposition made by an individual in the circumstances in paragraph (2) or (3), but not any other transaction that is treated as a disposition for the purposes of inheritance tax.
(2) The circumstances are that—
(a)the value transferred by the chargeable transfer is attributable to either—
(i)cash; or
(ii)quoted shares or securities; and
(b)the value transferred by the chargeable transfer, together with the values transferred by any previous chargeable transfers made by the transferor during the seven years preceding the transfer does not exceed the IHT threshold.
(3) The circumstances are that—
(a)the value transferred by the chargeable transfer, together with the values transferred by any previous chargeable transfers made by the transferor during the seven years preceding the transfer does not exceed 80% of the IHT threshold, and
(b)the value transferred by the transfer of value giving rise to the chargeable transfer does not exceed the net IHT threshold.
(4) For the purpose of paragraph (3)(b), sections 104 (business property relief) and 116 (agricultural property relief) shall not apply in determining the value transferred by the chargeable transfer.
Excepted terminations
5.—(1) An excepted termination is the termination of an interest in possession in the settled property of a specified trust in any of the following circumstances.
(2) The circumstances are that—
(a)the transferor has, in connection with the termination, given to the trustees of the settlement a notice under section 57(3) informing them of the availability of the exemption; and
(b)the value transferred in consequence of the termination does not exceed the amount of the exemption specified in the notice.
(3) The circumstances are that—
(a)the value of the property in which the interest subsisted is attributable to either—
(i)cash; or
(ii)quoted shares or securities; and
(b)the value transferred in consequence of the termination, together with the values transferred by any previous chargeable transfers made by the transferor during the seven years preceding the transfer does not exceed the IHT threshold.
(4) The circumstances are that—
(a)the value transferred in consequence of the termination, together with the values transferred by any previous chargeable transfers made by the transferor during the seven years preceding the termination does not exceed 80% of the IHT threshold; and
(b)the value transferred in consequence of the termination does not exceed the net IHT threshold.
(5) For the purpose of paragraph (4)(b), sections 104 (business property relief) and 116 (agricultural property relief) shall not apply in determining the value transferred in consequence of the termination.
Discharge of trustees from tax
6.—(1) This regulation applies to an excepted termination within regulation 5(2).
(2) The trustees of the settlement shall, at the expiration of the period of six months beginning with the date of the excepted termination, be discharged from any claim for tax attributable to the value of the property in which the interest subsisted unless, within that period, the Commissioners issue a notice requiring an account of that property.
(3) This regulation is subject to regulation 7.
7. Regulation 6 does not—
(a)discharge any person from tax in the case of fraud or failure to disclose material facts; or
(b)affect the liability to tax of any person other than the trustees of the settlement, or tax on any property other than that in which the interest subsisted.
Transfers reported late
8. Where no account of an excepted transfer is required by the Commissioners, an account of that transfer shall, for the purposes of section 264(8) (delivery of account to be treated as payment where tax rate nil), be treated as having been delivered twelve months after the end of the month in which that transfer is made.
Revocation
9. The Inheritance Tax (Delivery of Accounts) (Excepted Transfers and Terminations) Regulations 2002(6) are revoked in relation to any excepted transfer or excepted termination made on or after 6th April 2007.
Mike Hanson
Mike Eland
Two of the Commissioners for Her Majesty’s Revenue and Customs
6th March 2008