IHTM14211 - IHTA restriction of Rennell: outright gifts and other dispositions

In the application to IHT, the effect of Rennell v IRC ( IHTM14201) is restricted by IHTA84/S22 (3) and (4). These subsections distinguish between outright gifts, and other dispositions ( IHTM04023).

Outright gifts - To qualify for exemption under IHTA84/S22 (1), an outright gift has to be to a party to the marriage or civil partnership ( IHTM11032). If one or more of the donees is not a party to the marriage or civil partnership, you must apportion the property comprised in the gift between the exempt and non-exempt donees. This applies whether the donees take distinct interests or separate gifts.

Other dispositions qualify for exemption only if all the beneficiaries fall within the categories in IHTA84/S22 (4). The subsection does not permit an apportionment between exempt and non-exempt beneficiaries.

You can regard the disposition as an outright gift unless it creates a settlement ( IHTM16000). If property is settled by the gift it is an "other disposition" and falls within IHTA84/S22 (4). See the separate instructions where the disposition concerned is the termination of an interest in possession in settled property ( IHTM14221)

It may be possible to treat a settlement as comprising more than one disposition, for example where different shares of the trust property are settled on different trusts. However, if the taxpayer proposes sub-dividing the separate distinct set of trusts into further separate dispositions, refer to Technical Group.