IHTM30282 - Lifetime cesser of a qualifying interest in possession: cesser a PET

There are two sets of conditions, the second of which applies only where the qualifying property consists of unquoted shares or securities (IHTM18131). The first set of conditions contains alternatives.  Instalments are available only if one condition from the first set of conditions is satisfied and, where the qualifying property consists of unquoted shares and securities, the second condition is also satisfied.

First set of conditions

Under IHTA84/S227 (1C) instalments are available if either

  • the property was owned by the transferee throughout the period beginning with the date the potentially exempt transfer (PET) (IHTM04057) was made and ending with the death of the transferor (or, if earlier, the death of the transferee), or
  • for the purpose of determining the tax, the value of the property is reduced by Business Relief (IHTM25131) or Agricultural Relief (IHTM24000) under the replacement property provisions in IHTA84/S113 B or IHTA84/S124 B.

Second condition (unquoted shares)

Where the tax is attributable to unquoted shares or unquoted securities, instalments are available only if the shares or securities remained unquoted throughout the period from the date of the PET to the date of death of the transferor (or earlier death of the transferee) inclusive. There are examples (IHTM30242) illustrating the effect of this provision.

The transferee

‘The transferee’ is defined as the person who became owner of the qualifying property on the transfer or, where the transfer was into a relevant property trust (IHTM42161), the trustees of the settlement.  In view of IHTA84/S49 (1), where the property remains in the settlement on trusts that are a qualifying interest in possession after the transfer, the life tenant (IHTM16061) is the transferee.

Qualifying property

The qualifying property is the same as for potentially exempt transfers (PETs) (IHTM30251) generally.

For control holdings (IHTM30253) of shares or securities, the control required is that of the trustees immediately prior to the chargeable transfer.