The Inheritance Tax (Delivery of Accounts) (Excepted Transfers and Excepted Terminations) Regulations 2008

EXPLANATORY NOTE

(This note is not part of the Order)

These Regulations replace the Inheritance Tax (Delivery of Accounts) (Excepted Transfers and Excepted Terminations) Regulations 2002 (S.I. 2002/1731) (“the 2002 Regulations”) in relation to lifetime transfers made on or after 6th April 2007. The 2002 Regulations and these Regulations make provision in relation to the delivery of accounts and other information for inheritance tax purposes. These Regulations make some new and different provisions.

Regulation 1 provides for citation, commencement.

Regulation 2 interprets some of the terms used in the Regulations.

Regulation 3 provides that a person is not required to deliver an account for inheritance tax purposes under section 216 of the Inheritance Tax Act 1984 (c. 51) (“the 1984 Act”) of an excepted transfer or an excepted termination.

Regulation 4 defines excepted transfer. This is an actual (not deemed) chargeable transfer made by an individual on or after 6th April 2007, where one of two circumstances apply. The first is that the value transferred is attributable to either cash or quoted shares or securities and that value, together with the transferor’s chargeable transfers in the previous seven years, does not exceed the threshold for payment of inheritance tax for the year in which the transfer was made (“the inheritance tax threshold”). The second circumstance is that the value of the chargeable transfer, together with the transferor’s chargeable transfers in the previous seven years, does not exceed 80% of the inheritance tax threshold, and the value of the transfer of value does not exceed that threshold less the value of the transferor’s chargeable transfers in the previous seven years.

Regulation 5 defines excepted termination to mean the termination of an interest in possession in the settled property of a specified trust (separately defined) in one of three circumstances. The first is where the termination is wholly covered by an exemption made available to the trustees. The second is where the value in which the interest subsisted is attributable to either cash or quoted shares or securities, and the value transferred by the termination together with value of the transferor’s chargeable transfers in the previous seven years does not exceed the inheritance tax threshold. The third circumstance is where value transferred by the termination, together with the transferor’s chargeable transfer in the previous seven years, does not exceed 80% of the inheritance tax threshold, and the value of the transfer of value does not exceed that threshold.

Regulations 6 and 7 provide for the discharge of trustees in relation to an excepted termination within the first set of circumstances.

Regulation 8 makes provision for excepted transfers in relation to transfers reported late under section 264 of the 1984 Act.

Regulation 9 revokes the Inheritance Tax (Delivery of Accounts) (Excepted Transfers and Excepted Terminations) Regulations 2002 (S. I. 2002/1731) in relation to excepted transfers and terminations made on or after 6th April 2007.

These Regulations do not impose new costs on business or charities.