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HMRC internal manual

Inheritance Tax Manual

Lifetime transfers: The transferee

‘The transferee’ is defined as the person who

  • became entitled to the property on the transfer, or
  • where on the transfer the property became (or remained) settled on relevant property trusts , the trustees of the settlement, IHTA84/S124A (8).

In view of IHTA84/S49 (1), where after the transfer, the property is held on interest in possession (IHTM16062) trusts, the life tenant is the transferee. Where the ‘transferee’ became beneficially entitled to an interest in possession after 22 March 2006, S49(1) only applies if it is an immediate post death interest, a disabled persons interest, or a transitional serial interest (IHTM16061), IHTA/S49(1A).

The terms of the definition are precise, and where the property became or remained settled property you should note the following points.

Where the trusts after the transfer fall within the relevant property regime, the first condition will not be satisfied if before the transferor’s death

  • a beneficiary becomes absolutely entitled to the trust property, for example by reason of an appointment or termination of the trust, or
  • anyone becomes entitled to an interest in possession

as the transferee (the trustees) no longer own the property.

Where immediately after the transfer a beneficiary is entitled to an interest in possession in the income and before the death, that income interest comes to an end by, for example, a release, assignment, advance or apportionment, then

  • if the income beneficiary’s interest is enlarged into an absolute interest, the first condition will be treated as satisfied, but
  • if the beneficial interest, whether capital or income, goes to anyone else, the condition will not be satisfied as the transferee ( the original life tenant) will have ceased to be entitled to the property.