(1)This section applies where—
(a)apart from this section the transfer of value made on the death of any person is an exempt transfer to the extent that the value transferred by it is attributable to an exempt gift, and
(b)the exempt beneficiary, in settlement of the whole or part of any claim against the deceased’s estate, effects a disposition of property not derived from the transfer.
(2)The provisions of this Act shall have effect in relation to the transfer as if—
(a)so much of the relevant value as is equal to the following amount, namely the amount by which the value of the exempt beneficiary’s estate immediately after the disposition is less than it would be but for the disposition, or
(b)where that amount exceeds the relevant value, the whole of the relevant value,
were attributable to such a gift to the exempt beneficiary as is mentioned in subsection (3) below (instead of being attributable to a gift with respect to which the transfer is exempt).
(3)The gift referred to in subsection (2) above is a specific gift with respect to which the transfer is chargeable, being a gift which satisfies the conditions set out in paragraphs (a) and (b) of section 38(1) below.
(4)In determining the value of the exempt beneficiary’s estate for the purposes of subsection (2) above—
(a)no deduction shall be made in respect of the claim referred to in subsection (1)(b) above, and
(b)where the disposition referred to in that provision constitutes a transfer of value—
(i)no account shall be taken of any liability of the beneficiary for any tax on the value transferred, and
(ii)sections 104 and 116 below shall be disregarded.
(5)Subsection (1)(b) above does not apply in relation to any claim against the deceased’s estate in respect of so much of any liability as is, in accordance with this Act, to be taken into account in determining the value of the estate.
(6)In this section—
“exempt gift”, in relation to a transfer of value falling within subsection (1)(a) above, means—
a gift with respect to which the transfer is (apart from this section) exempt by virtue of the provisions of any sections 18 and 23 [F2to 28A] above, or
where (apart from this section) the transfer is so exempt with respect to a gift up to a limit, so much of the gift as is within that limit;
“the exempt beneficiary”, in relation to an exempt gift, means any of the following, namely—
where the gift is exempt by virtue of section 18 above, the deceased’s spouse [F3or civil partner],
where the gift is exempt by virtue of section 23 above, any person or body—
whose property the property falling within subsection (1) of that section becomes, or
by whom that property is held on trust for charitable purposes,
where the gift is exempt by virtue of section 24, [F4or 25] above, any body whose property the property falling within subsection (1) of that section becomes,
where the gift is exempt by virtue of section 24A above, any body to whom the land falling within subsection (1) of that section is given, and
where the gift is exempt by virtue of section 27 [F5, 28 or 28A] above, the trustees of any settlement in which the property falling within subsection (1) of that section becomes comprised;
“gift” and “specific gift” have the same meaning as in Chapter III of this Part; and
“the relevant value”, in relation to a transfer of value falling within subsection (1)(a) above, means so much of the value transferred by the transfer as is attributable to the gift referred to in that provision.]
Textual Amendments
F1Finance Act 1989 s. 172(1),in relation to deaths occurring on or after 27July 1989.
F2Words in s. 29A(6) substituted (with effect in accordance with Sch. 37 para. 12(2) of the amending Act) by Finance Act 2014 (c. 26), Sch. 37 para. 12(1)(a)
F3S. 29A(6): words in the definition of "the exempt beneficiary" inserted (5.12.2005) by The Tax and Civil Partnership Regulations 2005 (S.I. 2005/3229), regs. 1(1), 10
F4S. 29A(6): words in the definition of “the exempt beneficiary” substituted (31.7.1998 with effect in relation to any transfer of value made on or after 17.3.1998) by 1998 c. 36, s. 143(2)(a)
F5Words in s. 29A(6) substituted (with effect in accordance with Sch. 37 para. 12(2) of the amending Act) by Finance Act 2014 (c. 26), Sch. 37 para. 12(1)(b)