Malcolm Finney looks at a valuable but often overlooked inheritance tax exemption.
Inheritance tax (IHT) arising on lifetime gifts or death may be mitigated by a variety of reliefs and exemptions.
Dispositions for maintenance of family (IHTA 1984, s 11), whilst not strictly an exemption, are not treated as transfers of value (IHTA 1984, s 3), and thus do not fall within the charge to IHT; whether the donor dies within seven years or not.
The relief available is in essence unlimited but only applies with respect to lifetime transfers and not to the deemed transfer of a deceased’s estate on death (IHTA 1984, s 4).
Broadly, the relief applies where dispositions are made for the maintenance of the family, namely a person who is a party to a marriage, a child or a dependent relative.
