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HMRC internal manual

Inheritance Tax Manual

From
HM Revenue & Customs
Updated
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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’) 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 a general power may include the indirect ability to dispose inherent in an absolute right to acquire gratuitously the ownership of property, for example by appointing 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 (IHTM14000) it may be treated as a disposition, IHTA84/S3 (3). The words ‘or would if he were sui juris enable him’ require a person having a general power over unsettled property, but unable to exercise it through some personal disability (such as infancy or mental incapacity), to be treated as beneficially entitled to the property.