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HMRC internal manual

Inheritance Tax Manual

From
HM Revenue & Customs
Updated
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Termination of interest in possession: when the life tenant becomes entitled to the property on termination

IHTA84/S53 (2) provides that tax shall not be chargeable under IHTA84/S52 -

  • if the person whose interest in the property comes to an end becomes on the same occasion entitled to the property or to another interest in possession in the property.

This is most commonly seen where the property in which the life interest subsists is given to the life tenant absolutely.

There is an exception to this in IHTA84/S52 (4) (b): if the value of the property (or part) being received by the life tenant is less than the value of the interest in possession property he is giving up (valued in accordance with IHTA84/S49 and IHTA84/S52) then tax will be charged on the difference in value.

IHTA84/S53 (1A) provides that tax shall not be chargeable under IHTA84/S52 if the interest

  • arose before 22 March 2006,
  • comes to an end after that date, and
  • immediately before it was an interest in a trust for a bereaved minor under S.71A or in an Age 18-to-25 trust under S.71D.