SolvedIHTM04054 | Lifetime transfers: the loss to the transferor’s estate
From HM Revenue & Customs · Inheritance Tax Manual
The general rule is that the value transferred by a transfer of value (IHTM04024) is the
In valuing the transferor’s estate, you should take account of the transferor’s liabilities (IHTM28002) at the time of the disposition, but only
if imposed by law, or
to the extent that they were incurred for consideration in money or money’s worth, e.g. what the transferor received was a fair equivalent of the liability incurred.
Often the loss to the transferor’s estate is the same as the value of the property (IHTM04030) given. But in some situations, it can be more (IHTM04055) or less (IHTM04056) than the value of that property.
The transferor’s estate consists of all the property to which they are beneficially entitled (IHTM04031). But other than taking no account of excluded property that ceases to form part of the transferor’s estate, the legislation does not
direct that you ignore the value of excluded of property which is acquired by a person’s estate as a result of a disposition, or
require you to disregard excluded property which is not the subject of a disposition but is part of the person’s estate both before and after a disposition of other property and may therefore impact on the value of the loss to the transferor’s estate.
In theory, a disposition of other property could affect the value of excluded property which remains in the transferor’s estate and so affect the loss to the transferor’s estate. In practice, this situation is extremely unlikely and you will normally be able to ignore any excluded property in the transferor’s estate in valuing the estate before and after the transfer.