Commentary

I8.221 Settled property

IHT, trusts and estates

I8.221 Settled property

Particular categories of property

I8.221 Settled property

A person having a beneficiary-taxed interest in possession (for its meaning, see I5.201) under a trust is treated1 as being beneficially entitled to the property in which the interest subsists, ie the appropriate part of the trust property is deemed to be part of his estate. When his estate is valued before and after a transfer of value, therefore, the value of the settled property must be taken into account and is aggregable with any similar property in the free estate.

Example 1

AB owns 30% of the voting shares in his family company, XYZ Ltd. Also, under the terms of his father's will, he has a life interest (which is a beneficiary-taxed interest in possession) in another 30% of the shares. The value of a 30% holding is £50,000 and that of a 60% holding is £300,000.

  1.  

    •     If AB were to die, the value of the parts of his estate attributable to the shares in XYZ Ltd would be £300,000

  1.  

    •     If AB makes a lifetime gift of his own 30% holding, the value transferred is:

    Value of

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