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HMRC internal manual

Inheritance Tax Manual

Structure of the charge: what is a general power?

A person is treated as beneficially entitled (IHTM04031) to property (IHTM04030) or money if he or she has a general power which enables him or her, or would so enable if he or she was ‘sui juris’ (had capacity to manage their own affairs) either

  • to dispose of property other than settled property, or
  • to charge money on any property other than settled property.

A general power is defined as meaning a power or authority enabling the person by whom it is exercisable to appoint or dispose of property as he thinks fit, IHTA84/S5 (2). A power over settled property is also property (IHTM04030) for the purposes of IHTA84/S272.

The word ‘power’ in the phrase ‘power or authority’ is not used in a technical conveyancing sense, as in power of appointment, but in the sense of capacity (Re Penrose [1933] Ch 793). Thus general power may include the choice of appointing the assets to oneself (Re Penrose above). But you should not regard a person as having a general power to dispose of property merely because he could acquire it for consideration in the open market, or by exercising an option to purchase. Note however that

  • the option may itself form part of the estate of the person entitled to it, and
  • a deliberate omission to exercise (IHTM14810) it may be treated as a disposition, IHTA84/S3 (3).

The words ‘or would if he were sui juris enable him’ in IHTA84/S5(2) require a person having a general power over unsettled property, but unable to exercise it because of, for example, infancy or mental incapacity, to be treated as beneficially entitled to the property.