Jeremy Hosking v HMRC [2026] UKFTT 406 (TC)

Jonathan Wood v HMRC [2026] UKFTT 589 (TC)

Overview

The FTT has released decisions in two appeals, which were heard in quick succession, concerning the IHT treatment of donations made to campaigning organisations and political parties, all of which (save for one recipient) campaigned for the UK to leave the EU. 

In both appeals, the taxpayers contended, inter alia, that the relevant donations were ‘normal expenditure out of income’ for the purposes of section 21 of the Inheritance Tax Act 1984 (IHTA). The FTT’s decisions, while not binding, provide important guidance on the interpretation and application of this section.

In Wood, the taxpayer also relied on section 10 IHTA, and in Hosking, the taxpayer also relied on section 24 IHTA.

The FTT dismissed all grounds of appeal, holding that the relevant donations were chargeable to IHT.

Facts

Mr Hosking and Mr Wood are both high net worth individuals who frequently donated to various political and charitable causes. The relevant donations in each appeal were made to political campaigning organisations or political parties.

In Mr Hosking’s case, there were 15 relevant donations to four recipients: No Campaign Ltd (in 2011), Vote Leave Limited, Labour Leave Limited, and Brexit Express (which later became the Reclaim Party) (all of which were made in the period February to October 2016).

In Mr Wood’s case, there were 9 relevant donations to four recipients: No Campaign Ltd (also in 2011), Vote Leave Limited, Brexit Central and the Brexit Party (which later became the Reform Party) (all of which focused on campaigning for the UK to leave the EU). 

For both taxpayers,  the relevant donations varied significantly in their amount, and were made sporadically (as opposed to being part of a discernible pattern).

FTT’s Decisions

Normal expenditure out of income – section 21 IHTA

In both appeals, the sole issue under section 21 IHTA was whether each relevant donation was made as part of the normal expenditure of the taxpayer.

Both HMRC and the taxpayers relied upon Lightman J’s judgment in Bennett and others v IRC [1995] STC 54 (Bennett) as binding authority on the meaning of “normal expenditure” for the purposes of section 21 IHTA. 

The FTT held that, following Bennett, a gift will be normal expenditure only if: 1) the taxpayer adopted a commitment or firm resolution regarding their future expenditure, pursuant to which the relevant gift was made; or 2) looking at the taxpayer’s expenditure over a period of time, there was a settled pattern of expenditure of which the relevant gift formed part.

In both cases, the FTT found there was insufficient evidence that the taxpayers had adopted a commitment regarding their future expenditure. The FTT therefore focussed on whether the relevant donations formed part of a settled pattern, looking at the taxpayers’ expenditure over time.

In each case, the FTT accepted that the relevant donations (save for the donation to No Campaign Ltd in Hosking) had a common general character: (a) in Hosking, the donations were made to organisations which supported the UK leaving the EU (at [53]); (b) in Wood, the FTT split the donations into two groups, finding that each group of donations also had a common general character (at [105]-[106]). 

However, the FTT held that this alone was insufficient to establish a settled pattern. Applying Bennett, the FTT held that in circumstances where the donations were in varying amounts, there must have been a “formula or standard” used to quantify the donations in order for them to form part of a settled pattern (Hosking at [54] and Wood at [107]). In both cases, the taxpayers had not identified any formula or standard which they had used to quantify the amounts they would donate to the organisations, and so the FTT held that this requirement was not satisfied.

The FTT also concluded that in order for there to be a settled pattern, there must be a level of predictability or recurrence of the donations, which it also found was lacking. In both cases, the donations varied significantly in amount, frequency, and were only made as and when the donors chose to make them (in the case of both Mr Hosking and Mr Wood, whenever their cash resources allowed, and in the case of Mr Wood in particular, whenever there was a need for donations). 

Therefore, on the totality of the evidence, the FTT concluded that there was no settled pattern, such that the relevant donations were not normal expenditure for the purposes of section 21 IHTA.

These decisions highlight that it will not be sufficient for a taxpayer to show that there is some common general character to the relevant gifts to establish a settled pattern; a taxpayer will need to show that there was a level of regularity or predictability in terms of their amount (whether as a fixed amount or according to some formula/standard), number and frequency.

Section 10 IHTA

In Wood, the FTT also rejected the taxpayer’s alternative argument that the relevant donations were not intended to confer any gratuitous benefit on the donees for the purposes of section 10 IHTA, such that they were not transfers of value. 

Applying the Supreme Court’s decision in Parry and ors v HMRC [2020] UKSC 35, this required the FTT to decide whether: 1) objectively viewed, the donations did in fact confer a gratuitous benefit; and 2) subjectively viewed, the taxpayer intended to confer a gratuitous benefit. 

The FTT held that, objectively viewed, the relevant donations clearly did in fact confer a gratuitous benefit; Mr Wood did not acquire any legally enforceable rights in return for the donations, and the recipients gained complete control of the donation funds (at [56]-[59]). 

Applying a subjective test, the FTT accepted that Mr Wood intended to gain influence over the campaigns he was donating to in exchange for his donations; in cross-examination he said that he had daily calls during the Brexit campaign with Boris Johnson as a result of the donations. However, because he did not intend to acquire any enforceable rights from the donations, but did intend to put the recipients in a far better position in making the donations, the FTT held that he did intend to confer what was objectively a gratuitous benefit (at [60]-[66]). So long as one of his intentions was to confer a gratuitous benefit, the FTT held that Mr Wood could not satisfy section 10, even if he also intended to get something in return (at [67]-[74]). 

Section 24 IHTA

In Hosking, the taxpayer pursued an alternative argument that section 24 IHTA (which exempts donations to qualifying political parties from IHT) breached his rights under A1P1 read together with Article 14, and Article 10 of the ECHR, and that section 24 should be given a conforming construction pursuant to section 3 of the Human Rights Act 1998, so as to apply to the donations. The FTT also rejected this ground.

Applying the Court of Appeal’s decision in Banks v HMRC [2021] EWCA Civ 1439, the FTT held that section 24 IHTA did not discriminate on the grounds of political opinion, such that there was no direct or indirect discrimination for the purposes of A1P1 and Article 14 (at [85]-[93]). The FTT also went on to conclude, obiter, that any discrimination would have been justified for the same reasons identified in Banks (at [95]). The FTT swiftly dismissed the taxpayer’s reliance on Article 10 ECHR, as there was no evidence that he had been deterred from expressing his opinion or making donations as a result of section 24 IHTA not applying to his donations (at [98]).

Chris Stone KC and Alice Defriend successfully acted for HMRC in both cases.

The decision in Hosking can be viewed here; the decision in Wood can be viewed here.