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I4.225 Transfers between spouses

Subject to the exceptions set out below a transfer of value is an exempt transfer to the extent that the value transferred is attributable to property which becomes comprised in the estate of the transferor's spouse, or civil partner¹.

This means that if a lifetime transfer of an item of property by someone to their spouse involves a diminution in the value of their estate (and thus a transfer of value) (see I3.111–I3.114) which is greater than the increase in value of the spouse's estate as a result of the transfer, the entire transfer of value will still be exempt.

There will not usually be a great difference between the diminution in a transferor's estate for IHT purposes caused by a gift to their spouse and the value of the property given. This is usually even in the case of a majority holding of private company shares, because the related property provisions (see I8.241–I8.243) mean that the property given to the spouse or civil partner will still be taken into account in valuing