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HMRC internal manual

Capital Gains Manual

Trusts: outline of CGT for trusts: events during life of settlement

An INTEREST IN POSSESSION is a right to the income from particular property, or a share ofthe income, or the use of a particular asset. See CG36320 - CG36321. Prior to 6 April 2006on the death of a person with such an interest, if the property continued to be settledproperty, the trustees were treated as disposing of the property, or the part of theproperty corresponding to the share in the income, and reacquiring it at market value, butwithout any charge to tax unless there has been a previous held-over gain. The position isnow more complicated. This provision only applies where the interest falls withinparticular designated IHT categories. See CG36450+.

This corresponds to the exemption on the death of an individual except as regards previousheld-over gains.