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HMRC internal manual

Inheritance Tax Manual

Settled property: rights in residue

To surmount the difficulties posed by the general law when the administration of an estate has not been completed, IHTA84/S91 provides that:

  • where a person (is) entitled to take the interest in possession in the whole or part of the residue of an unadministered estate the same consequences shall follow for this Act as if he had become immediately entitled to an interest in possession (in the residue) or part on the date from which the income (or part) would have been due to him if the residue had been ascertained immediately after the death.

The effect is that for IHT, a person with an interest in possession (whether absolute or limited) in the whole or part of a deceased person’s residuary estate is treated as having a corresponding direct interest in the net assets for the time being held in the residuary estate.