IHTM04024 | Structure of the charge: what is a transfer of value?
From HM Revenue & Customs · Inheritance Tax Manual
A transfer of value is a disposition () made by a person as a result of which the value of their estate has decreased. All lifetime transfers must start with a disposition. Charges arising on death and on settled property where a qualifying interest in possession exists () are deemed transfers of value.
A transfer of value may only qualify as a potentially exempt transfer () to the extent that it would, apart from , be a chargeable transfer. This means that a transfer of value may be partly an exempt transfer () and partly a potentially exempt transfer.
For example, Alison gives Belinda £10,000. As it is Alison’s first transfer of value in the tax year the annual exemption () of £3,000 is available. So the gift is
an exempt transfer of £3,000, and as it would, apart from , be a chargeable transfer, it is
a potentially exempt transfer of £7,000.