Commentary

I3.114 The meaning of 'disposition' for IHT

IHT, trusts and estates

I3.114 The meaning of 'disposition' for IHT

Dispositions for IHT—general principles

I3.114 The meaning of 'disposition' for IHT

The concept of disposition is quite distinct from that of causing loss. Thus there can be a disposition which does not cause loss (a sale for full value in cash) and an event which causes loss but which does not amount to a disposition (the accidental destruction of an asset). Neither of these events can give rise to a transfer of value under this general definition.

Dispositions are defined as including dispositions effected by associated operations (see I3.115)1. Certain types of disposition, such as commercial transactions, maintenance of family, are expressly excluded from being transfers of value (see I3.141–I3.160).

The following do however fall within the definition of a disposition:

  1.  

    •     failure to exercise a right (see I3.117)

  2.  

    •     certain life policies issued in respect of an insurance policy (see I3.118)

  3.  

    •     alteration in a close company's capital (see I3.119)

  4.  

    •     property ceasing to be subject to a reservation during the donor's lifetime (see I3.119A)

Special rules apply to settled property and these are discussed at I3.120.

The term 'disposition' is similar to, yet not quite the same as, that of disposal, the term used in connection with CGT. Whereas CGT is structured in terms of disposals 'of assets' (and all forms of property are

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