Q&As

Where chattels are appointed out of a life interest trust during the life tenant's lifetime but do not physically pass to the recipient remainderman until a later date (thus remaining in the property in which the life tenant resides under the terms of the trust), which date should be used for the purposes of both the capital gains tax disposal and the starting point of the potentially exempt transfer seven-year clock?

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Produced in partnership with Paul Davies of Clarke Willmott
Published on LexisPSL on 03/05/2019

The following Private Client Q&A produced in partnership with Paul Davies of Clarke Willmott provides comprehensive and up to date legal information covering:

  • Where chattels are appointed out of a life interest trust during the life tenant's lifetime but do not physically pass to the recipient remainderman until a later date (thus remaining in the property in which the life tenant resides under the terms of the trust), which date should be used for the purposes of both the capital gains tax disposal and the starting point of the potentially exempt transfer seven-year clock?

Title and possession to chattels normally passes by delivery. However, if an appointment has been made (whereby the trustees declare that they will hold the chattels on trust for the remainderman), then the beneficial interest in the chattels will pass on the date of the appointment, even though that is before the date the chattels were delivered. The date of the appointment will be the date the interest of the life tenant in those chattels comes to an end, which is also the date of disposal for capital gains tax (CGT) purposes pursuant to section 71 of the Taxation of Chargeable Gains Act 1992.

The question presupposes that the life interest is either an ‘old-style’ life interest created prior to 22 March 2006, or is one of the other types of qualifying life interest referred to in section 49 of the Inheritance

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