BPR Qualifying Shares and Inter-Spouse Transfers

[jokerman]

Hi - would appreciate views on the following.

Person A transfers/gifts 1 million of BPR-qualifying shares to their Spouse, person B - say in July 2025. They have been held for 2+ years by Person A.
Person B dies within 2 years of the gift.

Is there any IHT to pay here?

The whole point in the transfer would be so that each person is able to utilise their 1million BPR allowance. But is there a risk that, within 2 years, the shares don't now qualify for BPR at all as they haven't been owned by the recipient for 2 years at the point of death of Person B.

Thanks in advance.

[bd6759]

S109(1) of the 1984 Act.

[TSPG01]

I am looking at the same scenario but concerned that s.109 requires a “transfer of value… eligible for relief …”.

Can a transfer of value be eligible for relief if it is an exempt transfer between spouses?

[jokerman]

Hi - I think that I have the same concern raised by TSPG01.

Elsewhere I have read "Section 109 is not triggered: For Section 109 to apply, the "earlier transfer" must have been eligible for BPR and have some IHT consequence (for example, being a transfer on death or a failed PET). Since a gift to a spouse is an exempt transfer, it does not meet the conditions of Section 109, and the recipient does not benefit from the donor's ownership period."

Really keen to hear others views on this! The objective is to split the BPR relief so as to minimise IHT payable.

Thanks.

[bd6759]

In the scenario, BPR is not due. That is clear from s109.

[AGoodman]

If there is a significant risk (or indeed if you just don't want any risk) you could take out insurance for the 2 year period.