A transfer of value (broadly, a gift) made in lifetime or on death that is exempt from inheritance tax. For example, gifts to certain favoured beneficiaries such as a spouses, civil partners and UK charities are exempt transfers.

The rules are contained in Chapter I, Part II of the Inheritance Tax Act 1984 (sections 18 to 29A). For further information see Practice note, Inheritance tax: overview: Exemptions available for both lifetime gifts and on death and Exemptions available for lifetime gifts only. See also HMRC: Inheritance Tax Manual: IHTM11000 - Exemptions: contents.