Inheritance Tax Act 1984 section 170

Leases for life, etc.

Section 170 explains how to value a lessor's retained interest in property where a lease for life (or similar lease) is treated as a settlement for inheritance tax purposes.

• Where a lease is treated as a settlement under section 43(3), the lessor retains an interest in the property that must be valued for inheritance tax purposes.
• The value of the lessor's interest is a proportionate part of the total value of the property.
• The proportion is determined by comparing the consideration actually given for the lease at the time it was granted to the full market value consideration that could have been obtained.
• This ensures that where a lease is granted at an undervalue, the shortfall is treated as settled property subject to inheritance tax, while the lessor's retained interest reflects only the consideration actually received.