Legal News | 2.04.26
The Pitfalls of Political Donations: Tribunal Clarifies IHT Exemptions
A recent decision of the First-tier Tax Tribunal has brought donations to political parties and their inheritance tax (IHT) treatment back into focus. The Tribunal rejected businessman Jeremy Hosking’s claim that £1.7 million of donations he made in support of the UK’s exit from the European Union qualified for exemption from IHT.
Between 2015 and 2023, Mr Hosking donated approximately £11.9 million to various political causes, including contributions to the Brexit “Leave” campaign. Before the Tribunal, he claimed that this gift – along with 15 others of a similar nature – should be treated as an exempt transfer and not therefore subject to IHT.
Mr Hosking put forward several lines of argument that the gifts should qualify for IHT exemption. Among them was the argument that his donations should be treated as gifts to a political party for which there is a specific IHT exemption set out in legislation. HMRC, however, disputed the argument.
Under UK law, for a political gift to be exempt from IHT, it must be made to a “qualifying political party”. A party qualifies only if, at the most recent general election prior to the gift, either:
- at least two members of the party were elected to the House of Commons; or
- one member was elected and the party’s candidates collectively received a minimum of 150,000 votes.
Because the Leave campaign was not a political party and did not meet these statutory requirements, the £1.7 million donation therefore did not satisfy the conditions for the exemption.
The case serves as a useful reminder of the importance of taking appropriate advice prior to making significant decisions that may impact your IHT exposure. The political party exemption is one of many potential IHT reliefs and exemptions, the conditions for which must be carefully navigated.
If you are currently considering your own estate planning and potential exposure to IHT, our Private Client team at Wansbroughs is here to help.
