IHT Exemption for Gifts to Political Parties: s24 IHTA 1984
Bequests and lifetime gifts to qualifying political parties are exempt from IHT under s24 IHTA 1984 — no cap, no seven-year rule. The party must have at least two MPs elected at the last general election, or one MP plus 150,000 votes.
Does the Political Party Qualify? (s24(2) IHTA 1984)
Test A
Party had 2 or more members elected to the House of Commons at the last general election
Test B
Party had 1 member elected to the House of Commons AND candidates received 150,000+ votes in total at that election
Neither test met
Party has no MPs, or has 1 MP but received fewer than 150,000 votes
Test applied at the date of the transfer, based on the most recent general election results.
Frequently Asked Questions
Is a bequest to a political party exempt from Inheritance Tax?
Yes — under s24 IHTA 1984, a transfer of value (including a bequest on death) to a qualifying political party is exempt from IHT. There is no cap on the amount that can be given or bequeathed to a qualifying political party free of IHT. The exemption applies to lifetime gifts as well as death bequests, meaning that a gift to a political party during a donor's lifetime is also exempt from IHT (as a transfer of value). Unlike the annual exemption or the potentially exempt transfer rules, the s24 exemption applies regardless of how recently the gift was made and without any seven-year rule.
Which political parties qualify for the IHT exemption?
Under s24(2) IHTA 1984, a qualifying political party is a party registered under the Political Parties, Elections and Referendums Act 2000 (PPERA) and which, at the last general election before the transfer: (a) had two or more members elected to the House of Commons; or (b) had one member elected to the House of Commons AND candidates of that party received not less than 150,000 votes in total at that election. This test is applied at the date of the transfer (looking back to the most recent general election). Parties represented in the devolved assemblies (Scottish Parliament, Senedd, etc.) but not in the House of Commons do not qualify unless they also meet the Westminster tests. Minor parties that polled well but elected no MPs do not qualify unless they have at least one elected MP.
Does the IHT exemption apply to donations to local party branches?
No — the s24 IHTA 1984 exemption applies to transfers to the political party itself (as registered under PPERA), not to individual candidates, constituency associations, or campaign funds unless those are properly constituted as part of the registered party. A gift to a local constituency party association that is not itself a registered party for PPERA purposes would need to be analysed on its own facts. In practice, the major political parties are registered as single entities, and donations routed through local associations to the central party should qualify — but this should be confirmed for each party structure. Donations to individual candidates (as opposed to the party) do not qualify for the s24 exemption.
Is Gift Aid available on donations to political parties?
No — Gift Aid under s25 Finance Act 1990 is available on gifts to charities and community amateur sports clubs, not to political parties. Political parties are not charities within the Charities Act 2011 (political purposes are not charitable). This means a donor cannot reclaim basic rate tax on a donation to a political party as they could with a charitable donation. The IHT exemption under s24 IHTA 1984 operates independently of Gift Aid — it is a free-standing IHT provision, not a tax relief on the donor's income. Income tax or CGT on the asset given is not affected by the s24 IHTA exemption.
Are large political donations subject to reporting requirements?
Yes — the IHTA 1984 s24 exemption has no bearing on Electoral Commission reporting obligations under PPERA 2000. Any donation to a registered political party that exceeds £11,180 (from a single donor in a calendar year, for parties outside election periods) must be reported to the Electoral Commission. During a national election campaign, lower reporting thresholds apply. These Electoral Commission obligations are entirely separate from the IHT position — a donation can be IHT-exempt under s24 and still require Electoral Commission reporting. The Electoral Commission publishes all reportable donations on a public register.
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