Regulation 4 Amendment of the principal Regulations

After regulation 5 (spouse, civil partner and charity transfers) of the principal Regulations insert—

“IHT threshold

5A.

(1)

Subject to paragraph (2), for the purposes of these Regulations “IHT threshold” means the amount shown in the second column in the first row of the Table in Schedule 1 to the 1984 Act (upper limit of portion of value charged at rate of nil per cent)^f1 and in the first column in the second row of that Table (lower limit of portion charged at next rate) applicable to—

(a)

chargeable transfers made in the year before that in which a person’s death occurred if—

(i)

that person died on or after 6th April and before 6th August, and

(ii)

an application for a grant of representation or, in Scotland, an application for confirmation, is made before 6th August in that year; or

(b)

chargeable transfers made in the year in which a person’s death occurred in any other case,

• and for this purpose “year” means a period of twelve months ending with 5th April.

(2)

Where the criteria specified in paragraphs (3) and (4) are met “IHT threshold” means the IHT threshold as defined in paragraph (1) as increased by 100 per cent.

(3)

The criteria specified in this paragraph are as follows—

(a)

immediately before the death of a person (referred to for the purposes of this paragraph and paragraphs (4), (5) and (6), as a “first deceased person”) that first deceased person was the spouse or civil partner of the person specified in regulation 4(2) or (3) (referred to for the purposes of this paragraph as “the survivor”);

(b)

the survivor survived the first deceased person;

(c)

either—

(i)

in a case where the first deceased person was the spouse of the survivor, the first deceased person died on or after 13th November 1974, or

(ii)

in a case where the first deceased person was the civil partner of the survivor, the first deceased person died on or after 5th December 2005; and

(d)

a claim is made pursuant to section 8A^f2 of the 1984 Act—

(i)

by virtue of which the nil-rate band maximum^f3 at the time of the survivor’s death is treated, for the purpose of the charge to tax on the death of the survivor, as increased by 100 per cent, and

(ii)

which is made in respect of not more than one first deceased person.

(4)

The criteria specified in this paragraph are as follows—

(a)

the first deceased person died domiciled in the United Kingdom;

(b)

the value of the first deceased person’s estate is attributable wholly to property passing—

(i)

under the first deceased person’s will or intestacy, or

(ii)

by survivorship in a beneficial joint tenancy or, in Scotland, by survivorship in a special destination;

(c)

of that property, not more than £100,000 represented value attributable to property which immediately before the first deceased person’s death was situated outside the United Kingdom;

(d)

the first deceased person was not a person by reason of whose death one of the alternatively secured pension fund provisions applies;

(e)

the first deceased person died without having made any chargeable transfers during the period of seven years ending with the first deceased person’s death; and

(f)

the value transferred by any chargeable transfer made on the death of the first deceased person was not reduced by virtue of section 104^f4 (business property relief) or section 116^f5 (agricultural property relief) of the 1984 Act.

(5)

For the purpose of paragraph 4(e), sections 104 (business property relief) and 116 (agricultural property relief) of the 1984 Act shall not apply in determining whether the first deceased person has made a chargeable transfer.

(6)

Subject to paragraph (7), for the purpose of paragraph (4)(e) any transfers of value made by the first deceased person in any period from 6th April in any year until and including the following 5th April which—

(i)

are exempt transfers by virtue of section 21 (normal expenditure out of income) of the 1984 Act,

(ii)

are made less than seven years prior to the death of that person, and

(iii)

are in total more than £3,000,

• shall be treated as chargeable transfers.

(7)

Paragraph (6) shall have effect in relation to deaths occurring on or after 1st March 2011.”.