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HMRC internal manual

Inheritance Tax Manual

Termination of interest in possession: disposal for consideration

Under IHTA84/S52(2), if a person disposes of their interest in possession for a consideration in money or money’s worth, tax shall be charged under S52 as if the value of the property transferred was reduced by the amount of the consideration.

But in determining the amount of the consideration the value of any reversionary interest in the property in which the IIP subsists, or any interest, reversionary or otherwise, in other property comprised in the same settlement, shall be left out of account.

This provision applies to cases under IHTA84/S51 (1) and not the more common ‘coming to an end of an interest’ under S52 (1).

On or after 22 March 2006, both of these provisions will only apply to an immediate post-death interest, a disabled person’s interest or a transitional serial interest.