Inheritance Tax Act 1984 section 145

Redemption of surviving spouse's or civil partner's life interest

Section 145 deals with the inheritance tax treatment where a surviving spouse or civil partner of someone who died intestate chose to convert their life interest in the estate into a capital sum, for deaths before 1 October 2014.

• Applied to deaths before 1 October 2014 where the deceased died intestate and the surviving spouse or civil partner held a life interest in part of the estate
• The surviving spouse or civil partner could require the personal representatives to redeem (buy out) the life interest by paying a lump sum, provided they exercised this right within twelve months of the grant of letters of administration (or longer if the court allowed)
• The exercise of this right was not treated as a transfer of value for inheritance tax purposes, and the surviving spouse or civil partner was treated as if they had always been entitled to a capital sum equal to the value of the life interest, rather than to the life interest itself
• The spouse or civil partner exemption applied to the capital sum actually received, rather than to the underlying assets in which the life interest had existed