CG36548 - 2006 IHT changes: IHT and CGT treatment from 22 March 2006: transfers to settlements

Transfers from the estate of a deceased person are covered by the charge on his estate on death. But a transfer to a settlement subject to the IIP rules would be exempt to the extent that his spouse or civil partner had an actual or deemed interest in possession in the settlement.

Lifetime transfers by individuals to settlements.

Type of transferee trust for IHT	Chargeable \ntransfer for \nIHT?	Disposal \nfor CGT?	Can Holdover \nRelief be claimed?
Disabled Actual or Deemed IIP	PET	Yes	S165 possible
Relevant Property Trust: settlor etc. \ninterest	Yes	Yes	No
Relevant Property Trust: no settlor \netc. interest	Yes	Yes	S260(2)(a)

A gift by a living individual to a settlement cannot fall into other category except for certain special trusts not considered here.

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

S165 and S260 do not apply to transfers to most settlements where the settlor or spouse or civil partner or minor child or minor step-child (unless married or in a civil partnership) can or do benefit.

For categories see CG36541.