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HMRC internal manual

Capital Gains Manual

Interests in possession: general

The expression `INTEREST IN POSSESSION’ is not defined in the tax legislation. It ishowever an important concept for Inheritance Tax as well as CGT, and the same principlesapply for both taxes.

Broadly speaking, a person has an interest in possession in property if he or she has theimmediate right to receive any income arising from it or to the use or enjoyment of theproperty. However an authoritative statement of the meaning of this term is provided inthe majority opinions of the House of Lords in the Capital Transfer Tax case of Pearson vIRC [1980] STC318.