Commentary

I3.120 Interests in and rights over settled property

IHT, trusts and estates

I3.120 Interests in and rights over settled property

I3.120 Interests in and rights over settled property

Settled property1 and beneficial interests in it receive special treatment for IHT purposes. This is because the policy of the legislation is to tax the underlying settled property by reference to changes in the currently subsisting beneficial interests in it, and to disregard dispositions of the beneficial interests save where those dispositions bring about such changes or where the rules would otherwise be a means of tax-avoidance.

However, the disregard of beneficial interests, and the exceptions to it, take different forms for different interests, and they can be thought of as falling into four broad categories in terms of how they are treated for IHT purposes:

  1.  

    •     Qualifying interests in possession (QIIPs).

  2.  

    A disposal of one of these is not a transfer of value, but it gives rise to an IHT charge on the settled property subject to the interest unless, for example, the person disposing of the interest receives consideration equal in value to that settled property2.

  3.  

    •     Reversionary interests in settled property which

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