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HMRC internal manual

Inheritance Tax Manual

Dispositions for the maintenance of the transferor's family: application to settled property

The provisions of IHTA84/S11 apply to dispositions (IHTM04023) of settled property in two distinct circumstances. Firstly, the provisions are specifically applied where a qualifying interest in possession (IIP) (IHTM16000) is disposed of (IHTM04085).  In these circumstances, you should apply the relevant provisions of IHTA84/S11 by reference to the circumstances of the individual whose life interest has ceased.

Secondly, the provisions may also apply where the disposition results in a reduction in the value of the settled property (IHTM04086). In these circumstances, you should apply the relevant provisions as if the trustees were the owners of the settled property.