Inheritance Tax Act 1984 section 76

Property becoming held for charitable purposes, etc.

Section 76 provides an exemption from inheritance tax exit charges and proportionate charges when settled property leaves a trust and passes to a charity, a qualifying political party, or a national heritage body.

• No exit charge arises when property leaves a relevant property trust (or certain other special trusts) and becomes held permanently for charitable purposes, by a qualifying political party, or by a national heritage body listed in Schedule 3.
• Where the amount that would otherwise be charged to tax exceeds the value of the property once it reaches the exempt body (less any consideration paid by the trustees), the exemption does not apply in full — tax is instead charged only on the excess.
• The exemption is denied if the transfer to the exempt body can be reversed (unless it survives unchallenged for 12 months and cannot be defeated after that point), or if any part of the property could later be used for non-charitable or non-exempt purposes.
• The exemption is also denied where an exempt body (a charity, qualifying political party or Schedule 3 body) has purchased an interest in the settlement for money or money's worth from a person other than another exempt body.