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HMRC internal manual

Inheritance Tax Manual

Settled property: alteration in a close company’s capital apportioned to trustees

Where the alteration in a close company’s capital is treated as a disposition made by the participators, (IHTM04069) and they include

  • a trustee of a settlement
  • in which an individual (IHTM04053) is entitled to an interest in possession (IIP) (IHTM16000) in unquoted shares etc in the company, and
  • the disposition (IHTM04023) would be a transfer of value (IHTM04024) if the trustee were beneficially entitled (IHTM04031) to the settled property, IHTA84/S100 applies.Each IIP is treated as coming to an end to the same extent as the decrease in the value of settled property caused by the alteration.

Where the IIP is one to which the individual became beneficially entitled on or after 22 March 2006, S100 only applies if the interest is an immediate post-death interest, a disabled person’s interest or a transitional serial interest (IHTM16061), S100 (1A).