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HMRC internal manual

Capital Gains Manual

From
HM Revenue & Customs
Updated
, see all updates

2006 IHT changes: IHT and CGT treatment before 22 March 2006: settlements and death of person with actual or deemed interest in possession

These are all cases where a person with an actual or deemed interest in possession died.

Cases where property remains settled after death of beneficiary.

| Type of trust for IHT at death | Chargeable
transfer for
IHT? | Disposal for CGT? | Can
Holdover
Relief be
claimed? | || | IIP trust: with new IIP for spouse or
civil partner of the previous income
beneficiary | No | TCGA92/72 applies
death uplift; liability
only if TCGA92/S74
applies | S165
possible | | IIP trust: other cases | Yes. Added to
deceased’s
estate. | TCGA92/72 applies;
death uplift; liability
only if TCGA92/S74
applies | S260(2)(a) | | Disabled Deemed IIP: with new interest
in possession for spouse or civil partner
of the disabled beneficiary | No | No effect |   | | Disabled Deemed IIP: any other
situation | Yes. Added to
deceased’s
estate | No effect |   | | Other non-IIP: settlor etc interest
settlor dies | Depending on
the assets
chargeable
under gifts
with
reservation
rules | No effect |   | | Deemed IIP: with new IIP for spouse or
civil partner of the previous beneficiary
with deemed IIP | No | No effect |   | | Deemed IIP: other cases | Yes. Added to
deceased’s
estate | No effect |   |

*Note that TCGA92/S165 is only available for certain assets.

For a summary of the types of trust see CG36529.

The gifts with reservation rules are complex. Please see the IHT Manual.

Cases where property ceases to be settled.

| Type of transferee trust for IHT | Chargeable
transfer for
IHT? | Disposal for CGT? | Can
Holdover
Relief be
claimed? | || | IIP trust: with transfer to spouse or
civil partner of the previous holder of
actual IIP | No | TCGA92/S73 applies
death uplift. Liability
only if TCGA92/S74
applies | S165
possible | | IIP trust: other cases | Yes. Added to
deceased’s
estate. | TCGA92/S73 applies
death uplift. Liability
only if TCGA92/S74
applies | S260(2)(a) | | Disabled Deemed IIP: with transfer
to spouse or civil partner of the
disabled beneficiary | No | TCGA92/S71(1)
applies, no uplift | S165
possible | | Disabled Deemed IIP: any other
situation | Yes. Added to
deceased’s
estate | TCGA92/71(1)
applies, no uplift | S260(2)(a) | | Other non-IIP: settlor etc interest
settlor dies | Depending on
the assets
chargeable
under gifts with
reservation
rules | TCGA92/71(1)
applies, no uplift | S260(2)(a) if
chargeable
transfer | | Deemed IIP: with transfer to spouse
or civil partner of the previous holder
of actual IIP | No | No effect |   | | Deemed IIP: other cases | Yes | TCGA92/71(1)
applies, no uplift | S165
possible |

*Note that TCGA92/S165 is only available for certain assets.

For a summary of the types of trust see CG36529.

The gifts with reservation rules are complex. Please see the IHT Manual.