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HMRC internal manual

Inheritance Tax Manual

Settled property: the charging provisions for an interest in possession trust on death

When someone has an interest in possession (IIP) (IHTM16000)in settled property they are treated as beneficially entitled (IHTM04031)to the underlying settled property, IHTA84/S49 (1).

This means that the property is treated as forming part of their estate (IHTM04029). When someone entitled to an IIP in any settledproperty dies, tax (if due) is therefore charged under IHTA84/S4 (1).

Where a person becomes beneficially entitled to an IIP on or after 22 March 2006, S49 (1)only applies if the interest is an immediate post-death interest, a disabled person’sinterest or a transitional serial interest (IHTM16061).