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HMRC internal manual

Inheritance Tax Manual

From
HM Revenue & Customs
Updated
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Lifetime cesser of an interest in possession: cesser taxable when made

The instalment requirements have to be considered separately for:

  • the tax immediately payable and

  • the additional tax payable on the transferor’s death within seven years of the cesser of the interest in possession.

Tax immediately payableBoth the conditions and the qualifying property are the same as for charges under the discretionary trust regime (

IHTM30290).

Additional tax payable on death of transferorFor transfers and other events on or after 17 March 1987 the conditions and the qualifying property are the same as when the cesser of the interest in possession constitutes a PET (

IHTM30282).

Transfers and other events prior to 17 March 1987For transfers and other events before that date, both the conditions and the qualifying property were the same as for charges under the discretionary trust regime (

IHTM30290) (the FA 1986 amendment to IHTA84/S227 covered only the tax payable on a PET). However instalments were not available if the property concerned had been sold by the transferee (even if qualifying replacement property had been purchased).