Inheritance Tax Act 1984 section 101

Companies' interests in settled property

Section 101 deals with how inheritance tax applies when a close company holds an interest in possession in settled property, by looking through the company to attribute that interest to the individual participators.

• Where a close company holds an interest in possession in a trust, the interest is attributed to the company's participators in proportion to their respective rights and interests in the company, rather than being treated as belonging to the company itself.
• For interests in possession acquired by the company on or after 22 March 2006, this look-through treatment only applies if the interest is an immediate post-death interest, a transitional serial interest, or falls within section 5(1B).
• If a participator disposes of their rights in the company to another person, the new participator is treated as holding the attributed interest in their own right — they do not inherit the previous participator's deemed entitlement, though the disposal itself may still be chargeable on the person making it.
• Where the participators include settlement trustees, and an individual holds a beneficial interest in possession in the settled property through which the trustees are participators, that individual is treated as directly entitled to the corresponding share of the company's attributed interest.