Inheritance Tax Act 1984 section 94

Charge on participators

Section 94 deals with how inheritance tax is charged on participators in a close company when the company makes a transfer of value, ensuring that transfers through companies do not escape the inheritance tax net.

• When a close company makes a transfer of value, the value is apportioned among participators according to their rights and interests, and each individual is treated as having made a personal transfer of value equal to the apportioned amount
• Amounts already subject to income tax or corporation tax, and amounts attributable to property outside the UK where the participator is not a long-term UK resident, are excluded from the apportionment
• Where a participator's apportioned share is 5% or less of the total value transferred, it is disregarded when calculating that person's cumulative total of previous transfers for inheritance tax purposes
• The annual exemption under section 19 applies to apportioned amounts under this section in the same way as it applies to direct transfers of value