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HMRC internal manual

Inheritance Tax Manual

Life Policies: trusts of life policies: policy settled on its own trusts: express life interest in favour of settlor

If

  • the only property settled is a policy on the life of the settlor, and
  • the settlor is given an express life interest, and
  • there is no clear indication that the settlor is not to receive any income produced during their lifetime

the settlor is considered to have an interest in possession (IHTM16062) in the policy.

Unless there is a clear indication of that the settlor is not to receive income it is considered impossible that the settlor did not intend to take any benefit from the only property in a settlement under which they have given themselves a life interest.

See the examples at IHTM20154 (England, Wales and Northern Ireland) and IHTM20155 (Scotland).