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HMRC internal manual

Inheritance Tax Manual

Definition and extent of liability (settled property): trustees

Under IHTA84/S45, where there would otherwise be no trustees, ‘trustee’ means any person in whom the settled property (IHTM16050) or its management is for the time being vested.

Extent of liabilityUnder IHTA84/S204 (2) the liability of a trustee as trustee for tax attributable to trust property is limited to

  • such property as they have actually received or disposed of, including settled land vested in the tenant for life before the event giving rise to the charge (IHTA84/S204 (2)(a))
  • such property as they have become liable to account for to the beneficiaries (IHTA84/S204 (2)(a))
  • other property available in their hands as trustees for payment of tax or which might have been so available but for their own neglect or default (IHTA84/S204 (2)(b)).

Pension schemesWhere any tax is attributable to the value of a pension (

IHTM17001) or annuity in or under such a fund as is specified in IHTA84/S151 (1) and which satisfies the conditions in IHTA84/S151 (2)(a) and (b) the trustees of the fund are excepted from liability by IHTA84/S210. (Compare this with the position when the tax is on a chargeable transfer on death (IHTM30025)).

Disputed casesAny case or letter which disputes or questions the liability of trustees to pay tax on settled property when a charge arises under Part III IHTA should be referred to Litigation Team. This instruction includes any liability to pay tax in respect of an event which is treated as a PET (

IHTM04057) by virtue of s.96 F(No 2)A 1987.

No communication should be sent to the taxpayers or their agents until the case (or letter) has been seen by Litigation Team.