Inheritance Tax Act 1984 section 46

Interest in possession: Scotland

Section 46 defines what constitutes an interest in possession in settled property for the purposes of inheritance tax as it applies in Scotland.

• In Scotland, an interest in possession in settled property means any interest under a settlement that entitles the holder to enjoy the property, or would do so if the property were capable of enjoyment.
• This includes an interest acquired by an assignee under an assignation of any kind of interest in property subject to a proper liferent, other than a reversionary interest.
• The person holding such an interest at any time is treated as having a corresponding interest in all or part of the property comprised in the settlement.
• As a result, the creation of such a trust is treated as a normal chargeable transfer and the settlor is taxed accordingly.