Death of person with interest in possession: death of annuitant
If the annuity is very high or low by comparison with the settled property it should ifpossible be dealt with on the same basis as has been adopted under the statutory ruleswhich apply for Inheritance Tax. The expression `corresponding part’ in Section 72(1)implies a connection between the amount of the annuity and the property required to fundit. This principle also applies where the person who has the main life interest dies, andthere is an annuity payable out of the settled property.
For example under a will trust X has an annuity of £200 and Y has the life interest. Thetrustees grant Y an agricultural tenancy at £200 yearly rent, although a realistic rentis £4,000. It is considered that Section 72 should apply to 200/4000 only.