IHTM16091 - Termination of interest in possession: the effect of terminating the interest

If the interest has vested in possession, the beneficiary may enjoy it for many years, or - quite commonly - it may be brought to an end聽while the beneficiary is enjoying it.聽

The effect of bringing the beneficiary바카라 사이트檚 interest to an end is that the individual in question ceases to have an interest in possession, and a claim to inheritance tax under IHTA84/S52 (1) (IHTM04084) will normally arise if:聽

  • the beneficiary became beneficially entitled to the interest in possession before 22 March 2006, or聽

  • the beneficiary became beneficially entitled to the interest in possession on or after 22 March 2006 and it is an immediate post-death interest ,聽a disabled person바카라 사이트檚 interest聽or a transitional serial interest聽

The beneficiary will be deemed聽the transferor.聽

IHTA84/S53(1A) provides that tax聽shall not be chargeable under IHTA84/S52 if聽

  • the person whose interest comes to an end聽became beneficially entitled to it before 22 March 2006,聽

  • the interest comes to an end聽on or after that date, and聽

  • immediately聽before it comes to an end, S71A (trusts for bereaved minors) or S71D (age 18-to-25 trusts) applies to the property in which the interest subsists.聽

IHTA84/S53(4A) provides that tax shall not be chargeable under IHTA84/S52 if:聽

  • the settled property became comprised聽in the settlement before 30 October 2024,聽

  • Immediately before 30 October 2024 the settled property was excluded聽property聽by virtue of IHTA84/S48(3) or S48(3A)聽meaning that,聽聽

    • at the time the property became comprised聽in the settlement, the settlor was not domiciled in the UK and at聽30 October the property was either:聽

      • foreign situs property聽(and not within Schedule A1), or聽

      • a holding in an Authorised Unit Trust (AUT) or Open Ended聽Investment Company (OEIC).聽

    • the settor聽was not a formerly domiciled resident聽(IHTM13062)聽聽at聽30 October 2024聽

    • the settlement did not involve a purchased interest in possession,聽

  • The beneficiary must have become beneficially entitled to the interest in possession before 30 October 2024,聽

  • At聽30 October 2024聽and at the date of termination of the interest, the settled property is聽foreign situs or a holding in an AUT or OEIC.聽

This is a transitional provision relating to the change to long-term UK residence聽(IHTM47022).