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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 an 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.