Inheritance Tax Act 1984 section 18

Transfers between spouses or civil partners

Section 18 provides an inheritance tax exemption for transfers of value between spouses or civil partners, subject to a cap where the receiving spouse or civil partner is not a long-term UK resident.

• Transfers between spouses or civil partners are generally fully exempt from inheritance tax, whether the property passes directly or increases the recipient's estate
• Where the transferor is a long-term UK resident but the receiving spouse or civil partner is not, the exemption is capped at £325,000 (the nil-rate band), reduced by any previous spouse or civil partner exemption already used
• The exemption does not apply where the gift only takes effect after a prior interest or period ends, or where it depends on a condition not met within 12 months of the transfer — though a simple survivorship clause does not disqualify the exemption
• Property is treated as given to a person if it becomes their property outright or is held on trust for them