Inheritance Tax Act 1984 section 204

Limitation of liability

Section 204 sets out the limits on how much inheritance tax different categories of person — personal representatives, trustees, beneficiaries and others — can be required to pay.

• A personal representative's liability is capped at the value of estate assets they have received (or could have received but for their own neglect), with special rules for settled land in the UK.
• A trustee's liability is limited to trust property they have actually received, disposed of, become accountable for to beneficiaries, or which is otherwise available in their hands for paying the tax.
• A person who is not the transferor but is liable for tax on a lifetime transfer or settled property is only liable once the tax is overdue and unpaid, and their exposure is reduced to reflect any tax that should have been borne by the transferor.
• Personal representatives of a deceased transferor are liable for tax on lifetime transfers only where no other person is liable or the tax remains unpaid twelve months after the end of the month of death, and even then only to the extent of estate assets available to them.