Inheritance Tax Act 1984 section 100

Alterations of capital, etc. where participators are trustees

Section 100 deals with the inheritance tax consequences when a close company alters its share or loan capital (or the rights attached to its shares or debentures), and one of the participators affected holds their shares or securities as trustee of a settlement in which an individual has an interest in possession.

• Where a close company alteration is treated as a deemed disposition by participators under section 98, and a participator holds the shares or securities as trustee of a settlement, special rules apply to tax the effect on the trust beneficiary's interest in possession.
• The section only applies where an individual holds an interest in possession in unquoted shares or unquoted securities of the close company forming part of the settled property, and the deemed disposition would be a transfer of value if the trustee were beneficially entitled to the property.
• For interests in possession acquired on or after 22 March 2006, the section applies only if the interest is an immediate post-death interest, a disabled person's interest, a transitional serial interest, or falls within section 5(1B).
• The taxable amount is measured by treating part of the individual's interest in possession as having come to an end — the part that corresponds to the decrease in value of the trust property caused by the alteration.

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