Commentary

I3.526 The special IHT rate—when it applies

IHT, trusts and estates

I3.526 The special IHT rate—when it applies

I3.526 The special IHT rate—when it applies

For transfers after 16 March 1987 but before 22 March 2006 potential exemption was available where property was settled on interest in possession trusts1, and the termination of an interest in possession could also be a potentially exempt transfer (PET see I3.313). For events after 21 March 2006 there is no potential exemption for property settled by lifetime gift (unless it is a trust for a disabled person within IHTA 1984, s 89 — see I3.312), and a transfer of assets into any other kind of settlement is a chargeable lifetime transfer (CLT — see I3.319).

CLTs on the commencement of trusts arise not only where property is settled by an individual, but also where a qualifying interest in possession (QIIP — see I5.102) comes to an end and is succeeded by trusts which do not include a QIIP. An event of the latter kind would normally give rise to an IHT charge calculated as if the person who had been entitled to the QIIP (often called the 'life

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