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HMRC internal manual

Inheritance Tax Manual

Employee benefit trusts: property leaving employee benefit trusts: charge to tax

Where settled property is no longer subject to trusts that qualify under IHTA84/S86, IHTA84/S72 provides for a flat rate charge (IHTM42802) to apply in certain circumstances. Rather than repeat a large part of the legislation, IHTA84/S72(5) imports the provisions of IHTA84/S70(3) to (10) into IHTA84/S72.

Under IHTA84/S72(1) the section applies to settled property to which IHTA84/S86 applies where no qualifying interest in possession, as defined in IHTA84/S59, subsists in it.

For this purpose, an interest in possession in part of the property is disregarded if that part is less than five per cent of the whole (IHTM42915).

The circumstances in which a charge to tax may be imposed under IHTA84/S72 are set out at IHTM42982.

An exemption where settled property ceases to meet the conditions to qualify as an Employee Ownership Trust (IHTM42995) is provided by IHTA84/S72(3A) (IHTM42997).