Inheritance Tax Act 1984 section 42

Supplementary

Section 42 provides supplementary definitions and rules for the chapter dealing with the allocation of exemptions, including the meaning of "gift", when a gift bears its own tax, how gift values are proportioned, and the treatment of Scottish legal rights.

• A "gift" is the benefit arising from a disposition or rule of law whereby property passes to a person or becomes applicable for a purpose on a transfer of value; a "specific gift" is any gift other than a gift of residue or a share in residue.
• A gift bears its own tax where the tax attributable to it falls on the person receiving the property, or is payable out of property applicable for the same purposes as the gifted property.
• Where the total value transferred is attributable to two or more gifts and the aggregate value of those gifts is less than the value transferred, each gift's value is scaled up proportionately so that together they equal the value transferred.
• Scottish legal rights claimed on a death are treated as a specific gift bearing its own tax, and any inheritance tax payable on the deceased's estate is ignored when determining the value of those legal rights.

---