Malcolm Finney takes a look at the inheritance tax impact of gifts to and by companies.
Inheritance tax (IHT) is typically thought of as the tax applicable to individuals and trustees. Whilst, of course, this is correct, the tax’s tentacles may extend to certain categories of companies with respect to gifts made by them or to them.
It is therefore not unusual for the impact of IHT to be overlooked where transactions involving companies are involved.
Gifts by companies
It is clear from the legislation (i.e., IHTA 1984 and FA 1986, as amended) that gifts made by a company cannot qualify as potentially exempt transfers (PETs) nor chargeable transfers (CTs). However, if the company making the gift is a ‘close company’ (IHTA 1984, s 102(1) adopts the definition of a close company for the purposes of the Corporation Tax Acts; in general
