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HMRC internal manual

Inheritance Tax Manual

From
HM Revenue & Customs
Updated
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Disclaimers: interests in settled property

Where a person who becomes entitled to an interest in settled property disclaims that interest, then

  • if the disclaimer is not made for a consideration in money or money’s worth
  • the IHTA applies as if he had not become entitled to that interest, IHTA84/S93.

You should note that

  • IHTA84/S93 has no time limit, and
  • applies to disclaimers of interests under lifetime settlements as well as under wills and intestacies.

However you will need to bear in mind that the lapse of time may make it difficult for the beneficiary to establish that they are still legally able to disclaim. You should consider the facts of each case carefully to ensure that the general law requirements of a disclaimer have been met. For example, a beneficiary who is given a life interest in the house in which they live, would find it difficult to argue that they had not received any benefit from the bequest.

IHTA84/S93 also covers the disclaimer of a reversionary interest after it has fallen into possession provided that the beneficiary has not already expressly or by implication accepted it.

Where the effect of a IHTA84/S93 disclaimer is to increase the tax payable on an earlier event, a certificate under IHTA84/S239 (IHTM40010) does not prevent us from collecting the additional tax if, but only if, HMRC did not become aware of the disclaimer until after the issue of the certificate.

If the deceased had an interest in possession (IHTM16061) and they had, and had exercised by will, a general power of appointment over the property, we regard that property as part of the deceased’s estate at death and any disclaimer must meet the conditions of IHTA84/S142 rather than IHTA84/S93.