IHTM47030 - Long-term UK residence: Spouse or civil partner exemption: Not a long-term UK resident

Where, immediately听before the transfer;听

  • the transferor is long-term UK resident (IHTM47020)听but听

  • the transferor鈥檚 spouse or civil partner (IHTM11032)听is not a long-term UK resident听

the exemption for transfers between spouses and civil partners is restricted. The exemption is limited to the nil-rate band that applies at the date of transfer.听听

This restriction to the amount of the exemption does not apply if;听

  • both the transferor and their spouse or civil partner are long-term UK residents, or听

  • the transferor is not a long-term UK resident听but the spouse or civil partner is a long-term UK resident听

The restriction applies to;听

  • the value before grossing (IHTM26121)听

  • the cumulative total of all transfers to a spouse or civil partner. So, when considering whether the restriction is exceeded,听you must take into account听the amounts allowed under earlier transfers to a spouse or civil partner,听whether or not听they were a long-term UK resident at the time, and听

  • since the exemption applies to transfers made by an听individual, if that person has been married or in civil partnership with more than person, the restriction applies to the cumulative total of all transfers to all spouses or civil partners.听

Where the appropriate limit听is exceeded, you should allocate听the exemption in the way which is most favourable to the spouse or civil partner. Factors you should bear in mind include which assets bear the tax and whether business relief (IHTM25131), agricultural relief (IHTM24001) or any other reliefs are available.听

Example 1听听

In August 2026, Pippa, who was a long-term UK resident, transferred 拢300,000 to Jonathan, who was not a long-term UK resident. Of this transfer, 拢300,000 is exempt under IHTA1984/S18(2).听

Pippa dies in 2030听and leaves all her听property to Jonathan, who is still not a long-term UK resident. On Pippa鈥檚 death, the听remaining听exemption of 拢25,000 (Nil rate band = 拢325,000听鈥� 拢300,000听(previous听gift to Jonathan))听is now available on her听death.听

Example 2听听听

In June 2025, David, who has only been resident in the UK for 8 years,听transfers a UK property worth 拢200,000 to his civil partner听Phillip. Both are not long-term UK residents. Exemption under IHTA1984/S18 (1) is available in full.听听

In June 2030,听David听is now a long-term UK resident and gives another UK property worth 拢600,000听to Phillip, who is still not a long-term UK resident.听The restriction on the exemption under IHTA1984/S18 (2) applies at this point.听

At the time of the second transfer, the spouse or civil partner exemption available to Phillip听was 拢325,000. David has already made a gift to Phillip听that qualified for exemption under IHTA84/S18 of 拢200,000, so the exemption available against this transfer is 拢125,000. This is because IHTA84/S18(2) reduces the amount of the limited exemption available by 鈥榓ny amount previously taken into account for the purposes of the exemption conferred by this section鈥�. This means that 拢475,000听of the transfer will be a potentially exempt transfer听(IHTM04057) to Phillip听and chargeable to tax if David听dies before June 2037.