IHT - Exemptions - Lifetime and Death

Question 1

Which IHT exemptions apply to both lifetime gifts and the death estate?

Answer 1

• Spouse exemption
• Charity exemption
• Business Property Relief (BPR)
• Agricultural Property Relief (APR)
• Political party exemption
• Gifts for national purposes or heritage maintenance funds
• Gifts to Employee Benefit Trusts (EBTs)
• Gifts to housing associations

Question 2

What is spouse exemption?

Answer 2

It allows unlimited lifetime and testamentary gifts between UK-domiciled spouses to be completely exempt from IHT.

Applies regardless of how the gift is received (will, intestacy, survivorship, etc.).

Question 3

Does spouse exemption apply to a life interest trust for the surviving spouse?

Answer 3

Yes—the life interest qualifies for spouse exemption.

Question 4

Does it apply to remainder interests for the spouse?

Answer 4

No—if the spouse only receives a remainder interest, the exemption does not apply.

Question 5

What is the charity exemption?

Answer 5

All lifetime and testamentary gifts to registered charities are exempt from IHT, provided used for charitable purposes.

Question 6

Does the gift need to be absolute to qualify?

Answer 6

Yes—it must be absolute and immediate, not in remainder.

Question 7

Can you use charity exemption for a conditional gift?

Answer 7

Yes—provided the condition is satisfied within 12 months of death.

Question 8

How do you check if a charity qualifies for the exemption?

Answer 8

It must fall under the jurisdiction of UK courts. A UK charity register search can confirm this.

Question 9

What is the political party exemption?

Answer 9

Gifts to political parties are exempt if the party had 2+ MPs or 1 MP and 150,000 votes at the last general election.

Question 10

What is the exemption for gifts to housing associations?

Answer 10

A gift of land to a housing association or social landlord is exempt from IHT.

Question 11

What qualifies for exemption under s.25 IHTA (national purposes)?

Answer 11

Gifts to institutions like museums and galleries listed in Schedule 3 (e.g. British Museum) that serve national public purposes.

Question 12

What is the exemption under s.27 IHTA for heritage maintenance funds?

Answer 12

Gifts to designated trusts that maintain historic buildings or land—they’re exempt from IHT, and the fund remains exempt if compliant.

Question 13

What is the exemption under s.28 IHTA for Employee Benefit Trusts (EBTs)?

Answer 13

Share transfers into compliant EBTs are exempt if strict statutory conditions are met.