Inheritance Tax Act 1984 section 163

Restriction on freedom to dispose

Section 163 deals with how property is valued for inheritance tax purposes when a contract has restricted or excluded the owner's freedom to dispose of that property.

• Where a contract restricts or excludes the right to dispose of property, that restriction is generally ignored for IHT valuation purposes on the first relevant chargeable event after the contract was made.
• The restriction may only be taken into account to the extent that consideration in money or money's worth was actually given for it.
• If the contract itself was a chargeable transfer (or part of associated operations forming a chargeable transfer), an allowance is given for the value transferred, calculated as though no tax were chargeable on it.
• For contracts made before 27 March 1974, the restriction is only disregarded if the first relevant event is a transfer made on death.

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