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HMRC internal manual

Capital Gains Manual

Life interests: extension to non-life interests


For deaths prior to 6 April 1996, the legislation in TCGA92/S72 to TCGA92/S75 appliedto life interests in possession only, see CG36330. In the original legislation enacted in1965, which imposed a charge on the termination of such an interest, whether it was ondeath or otherwise, this was a deliberate restriction. The purpose of the legislation nowhowever is to provide relief similar to that given on the death of an individual. There isa charge to Inheritance Tax on the death of a person with an interest in possession,whether or not it is a life interest. The concession therefore as far as possible treatsall interests in possession in the same way. The most common cases are described inCG36331 and CG36333.

The concession provides that, subject to the restrictions in CG36376 - CG36381,

  • TCGA92/S72 (uplift on death of life tenant where property continues to be settled)
  • and TCGA92/S73 (full or partial relief on absolute entitlement following death of life tenant)

shall be treated as applying on the death of a person who has an interest in possessionwhich is not a life interest in the same way as on the death of a person with a lifeinterest in possession. The concession can apply whether or not there is Inheritance Taxliability on the death of the person in question.