Section 131 The relief.
United Kingdom
Subject to section 132 below, this section applies where F1because of the transferor’s death within seven years of the transfer, tax becomes chargeable in respect of the value transferred by a potentially exempt transfer or (by virtue of section 7(4) above) additional tax becomes chargeable in respect of the value transferred by any other chargeable transfer and (in either case) all or part of the value transferred is attributable to the value of property (“the transferred property”) which—
is, at the date of the death, the property of the person (“the transferee”) whose property it became on the transfer or of his spouse F2or civil partner , or
has, before that date, been sold by the transferee or his spouse or civil partner by a qualifying sale;
and in the following provisions of this section “the relevant date” means, in a case within paragraph (a) above, the date of the death, and in a case within paragraph (b), the date of the qualifying sale.
If—
the market value of the transferred property at the time of the chargeable transfer exceeds its market value on the relevant date, and
a claim is made by a person liable to pay the whole or part of F3the tax or, as the case may be, additional tax,
the tax or, as the case may be, additional tax shall be calculated as if the value transferred F4reflected the market value of the transferred property on the relevant date, rather than its market value at the time of the chargeable transfer.
A claim under subsection (2)(b) must be made not more than 4 years after the transferor's death.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
A sale is a qualifying sale for the purposes of this section if—
it is at arm’s length for a price freely negotiated at the time of the sale, and
no person concerned as vendor (or as having an interest in the proceeds of the sale) is the same as or connected with any person concerned as purchaser (or as having an interest in the purchase), and
no provision is made, in or in connection with the agreement for the sale, that the vendor (or any person having an interest in the proceeds of sale) is to have any right to acquire some or all of the property sold or some interest in or created out of it.
Annotations
Textual amendments
- F1
Finance Act 1986 Sch. 19, para. 23(1),with effect from 18March 1986.Originally
“(by virtue of section 7(2) above) additional tax becomes chargeable in respect of the value transferred by a chargeable transfer because of the transferor's death within three years of the transfer and”.
- F2
Words in s. 131(1) inserted (5.12.2005) by The Tax and Civil Partnership Regulations 2005 (S.I. 2005/3229), regs. 1(1), 25
- F3
Finance Act 1986 Sch. 19, para. 23(2),with effect from 18March 1986.Originally
“the additional tax”.
- F4
Words in s. 131(2) substituted (with effect in accordance with Sch. 12 para. 17 of the amending Act) by Finance Act 2026 (c. 11), Sch. 12 paras. 8(2), 17
- F5
S. 131(2ZA) inserted (1.4.2011) by Finance Act 2009 (c. 10), s. 99, Sch. 51 para. 6; S.I. 2010/867, art. 2(2)
- F6
S. 131(2A) omitted (with effect in accordance with Sch. 12 para. 17 of the amending Act) by virtue of Finance Act 2026 (c. 11), Sch. 12 paras. 8(3), 17
Notes on the whole Act
Textual amendments
- F1
By Finance Act 1986 s. 100(1), on and after 25 July 1986 the Capital Transfer Tax Act 1984 may be cited as the Inheritance Tax Act 1984.