IHTM16064 - Interests in possession: what happens if consideration is given
IHTA84/S49 (2) provides an important exception to the rule in S49 (1):
- where a person becomes entitled to an interest in possession in settled property as a result of a disposition for a consideration in money or money바카라 사이트檚 worth, any question whether and to what extent the giving of the consideration is a transfer of value or chargeable transfer shall be determined without regard to S49 (1).
This provision is a necessary barrier to prevent any tax advantage by manipulation of the 바카라 사이트榬eal바카라 사이트� value and the S49 (1) basis of valuation.
For example, if the buyer pays 拢1,000,000 for a life interest in a 拢1,000,000 fund, when the life tenant is 50 years old and the life interest is 바카라 사이트榬eally바카라 사이트� worth, say, 拢500,000 on an actuarial basis, the buyer will fall foul of S49 (2) and the consideration given will be viewed in 바카라 사이트榬eal world바카라 사이트� terms, i.e. the buyer has made a gift of 拢500,000.
So far as the seller is concerned IHTA84/52 (2) applies so that there is no charge as the IHT value (拢1M) is reduced by the amount of the consideration (拢1M).