Inheritance Tax Act 1984 section 175

Liability to make future payments, etc.

Section 175 deals with how liabilities relating to future payments or asset transfers are valued when calculating a deceased person's estate for inheritance tax purposes.

• When valuing a deceased person's estate, certain liabilities to make future payments or transfer assets may be taken into account as deductions.
• These liabilities must relate to dispositions of the type described in section 262, which deals with tax chargeable on future payment arrangements.
• The amount of the liability is not taken at full face value — it must be reduced by the "chargeable portion" as defined in section 262.
• The effect is to prevent a double tax benefit: the liability cannot fully reduce the estate value when the future payments themselves will also be subject to inheritance tax.