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HMRC internal manual

Inheritance Tax Manual

HM Revenue & Customs
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Settled property: purchase of a reversionary interest by a charity after 12 April 1978 (anti-avoidance)

With one exception (mentioned below) charity exemption and the exemptions at IHTA84/S24 to IHTA84/S27 do not apply to any property by reason of IHTA84/S56 (3)(b) if:

  • immediately before becoming the property of the ‘exempt body’ it was comprised in a settlement, and
  • on or after 12 April 1978
  • an interest in the settlement is or has been acquired for a consideration in money or money’s worth by the same organisation or another ‘exempt body’

‘Exempt body’ is defined by IHTA84/S56 (4) as a charity (IHTM11112), political party (IHTM11191) or other body within IHTA84/S23 to IHTA84/S26 or the trustees of a maintenance fund for historical buildings (IHTM11250) and similar property.

The exception (referred to above) is that IHTA84/S56 (3) (b) does not apply if the purchase was from an exempt body within IHTA84/S23 to IHTA84/S25. However this exception only applies to purchases from exempt bodies within IHTA84/S23 to IHTA84/S25, not from the full range of exempt bodies as defined in IHTA84/S56 (4).

So, where the exempt body has purchased a reversionary interest (IHTM16231), exemption will only be due if the reversion was bought from a body within IHTA84/S23 to IHTA84/S25.


‘Exempt body’ used to include certain private bodies which preserve national heritage property for public benefit. The relevant provisions were repealed in 1998. It is possible, if unlikely, that before 1998 one of these bodies purchased a reversion which would not fall in until later. Any such case should be referred to Technical for guidance before allowing exemption.