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HMRC internal manual

Inheritance Tax Manual

Ownership: Reversionary interests

Ownership of a reversionary interest in settled property (IHTM16231) does not confer ownership of the underlying settled property whilst the interest is in reversion.


In 1980 a farm is settled on trust for L for life with remainder to R absolutely. R is not L’s spouse. The farm is occupied by T under a protected tenancy. (IHTM24210)

L dies in May 1989. T still occupies the farm. As L satisfies the seven year ownership condition in IHTA84/S117 (b), agricultural relief is due on L’s death and R inherits the farm.

R dies in November 1990. T still occupies the farm. The seven year ownership condition in IHTA84/S117 (b) is not satisfied on R’s death. R is treated as owning the farm from the death of L by virtue of IHTA84/S120 (1)(a). However, during L’s lifetime the farm was owned by L, not R, for the purposes of S117. Accordingly R owned the farm for only eighteen months.

If, L had been R’s spouse, under the succession provisions (IHTM24120) of IHTA84/S120 (1)(b) R would be deemed to have owned the farm throughout the period during which L was life tenant of it and so the seven year ownership condition would have been satisfied.

The successive transfer (IHTM24130) provisions of IHTA84/S121 do not confer relief because S121 (1)(b) is not satisfied, as the farm is not occupied (IHTM24070) by either R or the personal representatives of L.