Some sources which offer advice on what gifts are exempt from
being clawed back into a person's estate make a point of saying
that where single gifts of value in excess of the £250 limit
are involved, that the entire gift becomes ineligible, instead
of the first £250 being counted as eligible and only the excess
being disallowed.

I can understand the thinking behind this if "small gifts" are
defined as of "up to £250" in aggregate value, and that a gift
worth (say) £500 is therefore not "small", but this really only
makes sense in the case of an indivisible gift, e.g. an item (such
as a car or a work of art or a musical instrument) of too large
a value to be considered "small".

But where the gift is divisible (e.g. because it is a gift of
cash or shares etc), then surely it is possible to say that it
is really two gifts, i.e. one of £250 and one of the rest.

Suppose the deceased had made two cash gifts to the same person
in the same tax year, but on different occasions, each of £250.
Surely then one of them would qualify and the other not, as
opposed to it being considered an aggregate gift of £500 which
would therefore not qualify at all.

What do the panel think?

I have read the relevant section of IHTA84 and am none the wiser.
I guess there must have been case law to "interpret" this
gibberish...

> I have read the relevant section of IHTA84 and am none the wiser.
> I guess there must have been case law to "interpret" this
> gibberish...


I don't have the recent amendments but if the text is still:

"Transfers of value made by a transferor in any one year by outright 
gifts to any one person are exempt if the values transferred by them 
(calculated as values on which no tax is chargeable) do not exceed 
£250."

then I think the thing to focus on is the use of the plurals 
"Transfers......gifts....values......values....." throughout.

Counsel could just as easily have drafted in the singular and then gone 
on to make some provision about multiple gifts which would have had the 
effect you suggest of exempting a £250 "slice".  The fact that it was 
drafted the way it was means that you do have to look at the value or 
(total) values and so the £250 exemption is a "slab" - you lose it if 
you go over.  I don't say it couldn't be made clearer - albeit also 
longer - by referring to a transfer or transfer and the value or total 
of values.  But for something drafted at speed in the 1980s it seems 
fine.

neverwas wrote:

> 
>> I have read the relevant section of IHTA84 and am none the wiser.
>> I guess there must have been case law to "interpret" this
>> gibberish...
> 
> 
> I don't have the recent amendments but if the text is still:
> 
> "Transfers of value made by a transferor in any one year by outright
> gifts to any one person are exempt if the values transferred by them
> (calculated as values on which no tax is chargeable) do not exceed
> £250."
> 
> then I think the thing to focus on is the use of the plurals
> "Transfers......gifts....values......values....." throughout.
> 
> Counsel could just as easily have drafted in the singular and then gone
> on to make some provision about multiple gifts which would have had the
> effect you suggest of exempting a £250 "slice".  The fact that it was
> drafted the way it was means that you do have to look at the value or
> (total) values and so the £250 exemption is a "slab" - you lose it if
> you go over.  I don't say it couldn't be made clearer - albeit also
> longer - by referring to a transfer or transfer and the value or total
> of values.  But for something drafted at speed in the 1980s it seems
> fine.

I note what you say but am not sure I understand your meaning.  Are you
saying that the fact they use the plural means that any singulars which
make up an aggregate must be disallowed if they bring the total over the
limit, or are you saying that the whole aggregate would be disallowed?

If X gives 3 paintings worth £200, £30 and £40 to Y in a year on three
separate occasions, would this count as £240 or as nothing?

If the former, then:

If X gives £300 cash to Y, and since cash can be sliced (ignoring pence)
into single pounds, this can be treated as 300 gifts of £1 each, and ought
therefore to qualify as 250 gifts of £1 which qualify as part of the £250
quota, plus 50 gifts of £1 which do not.  Yes or no?

> I note what you say but am not sure I understand your meaning.  Are 
> you
> saying that the fact they use the plural means that any singulars 
> which
> make up an aggregate must be disallowed if they bring the total over 
> the
> limit, or are you saying that the whole aggregate would be disallowed?

Neither really - just that the use of the plural leads to it being a 
slab with a cliff edge.

>
> If X gives 3 paintings worth £200, £30 and £40 to Y in a year on three
> separate occasions, would this count as £240 or as nothing?

Let's plug it into s.20:

values transferred     = £200 + £30 +£40
                                =£270

so values transferred *do* exceed £250

so the transfers are not exempt.


> If the former, then:
>
> If X gives £300 cash to Y, and since cash can be sliced (ignoring 
> pence)
> into single pounds, this can be treated as 300 gifts of £1 each, and 
> ought
> therefore to qualify as 250 gifts of £1 which qualify as part of the 
> £250
> quota, plus 50 gifts of £1 which do not.  Yes or no?
>

No.  While you may well think there "ought" to be a £250 allowance, I 
don't see how you can read s.20 to give it.  It makes no provision for 
you to look at one lot of transfers (those up to £250) separate from 
others (those which take the total over £250).

neverwas wrote:

>> I note what you say but am not sure I understand your meaning.  Are
>> you
>> saying that the fact they use the plural means that any singulars
>> which
>> make up an aggregate must be disallowed if they bring the total over
>> the
>> limit, or are you saying that the whole aggregate would be disallowed?
> 
> Neither really - just that the use of the plural leads to it being a
> slab with a cliff edge.
> 
>> If X gives 3 paintings worth £200, £30 and £40 to Y in a year on three
>> separate occasions, would this count as £240 or as nothing?
> 
> Let's plug it into s.20:
> 
> values transferred     = £200 + £30 +£40
>                                 =£270
> 
> so values transferred *do* exceed £250
> 
> so the transfers are not exempt.

Yes, OK, if you add up all three, then that combination is not exempt.
But £200 + £40 = £240, so those two do *not* exceed £250 and *are* exempt.

The relevant subsection 20(1) reads:  "Transfers of value made by a
transferor in any one year by outright gifts to any one person are exempt
if the values transferred by them (...) do not exceed £250."  ["them"
meaning "those transfers"]

Notice how the word "All" is conspicuous by its absence from the beginning
of the sentence, and so how do you read into it that *all* three of the
transfers (200+30+40) of my example must be aggregated?

It seems to me that in the circumstances any two of the transfers *are*
"transfers of value made ... [which] do not exceed £250", and therefore
any two should be exempt with the third being left in the estate.  This
is not quite the same as saying there is an allowance.

>> If the former, then:
>>
>> If X gives £300 cash to Y, and since cash can be sliced (ignoring
>> pence)
>> into single pounds, this can be treated as 300 gifts of £1 each, and
>> ought
>> therefore to qualify as 250 gifts of £1 which qualify as part of the
>> £250
>> quota, plus 50 gifts of £1 which do not.  Yes or no?
> 
> No.  While you may well think there "ought" to be a £250 allowance, I
> don't see how you can read s.20 to give it.

I can read that into it by noting the absence of "all".

> It makes no provision for
> you to look at one lot of transfers (those up to £250) separate from
> others (those which take the total over £250).

I disagree.  How do you read that into it?  It seems to me that if any
*single indivisible* transfer of value (such as a painting) is worth more
than £250 (on its own or if combined with any other transfer or transfers
of value made in the same year), then it would not be exempt (and indeed
if a £300 painting had been given, this could not be treated as a £250
allowance of value with the remaining £50 non-exempt).

But where there have been a number of *separate divisible* transfers,
I don't see how the wording would disallow selecting a subset of the
transfers which together add up to an amount as large as possible but
less than £250.

>
> The relevant subsection 20(1) reads:  "Transfers of value made by a
> transferor in any one year by outright gifts to any one person are 
> exempt
> if the values transferred by them (...) do not exceed £250."  ["them"
> meaning "those transfers"]
>
> Notice how the word "All" is conspicuous by its absence from the 
> beginning
> of the sentence, and so how do you read into it that *all* three of 
> the
> transfers (200+30+40) of my example must be aggregated?
>
> It seems to me that in the circumstances any two of the transfers 
> *are*
> "transfers of value made ... [which] do not exceed £250", and 
> therefore
> any two should be exempt with the third being left in the estate. 
> This
> is not quite the same as saying there is an allowance.
>

I hope we can agree to disagree on the basis that, while you give weight 
to the absence of "all", I take "Transfers of value made by a transferor 
in any one year by outright gifts to any one person" and "values" to 
mean all such transfers and values - not least because there is no 
provision to discriminate between transfers.

This is of course why we have a system of appeals.  I wish you well if 
you care to take a test case!