Inheritance Tax Act 1984 section 52

Charge on termination of interest in possession

Section 52 sets out the inheritance tax charge that arises when a beneficiary's interest in possession in settled property comes to an end during their lifetime, and explains how the charge is calculated.

• When a beneficiary's interest in possession ends during their lifetime, inheritance tax is charged as if they had made a transfer of value equal to the value of the property in which the interest subsisted.
• If the interest is disposed of for consideration in money or money's worth, the taxable value is reduced by the amount of consideration received, but the value of any reversionary interest or interest in other property within the same settlement is ignored.
• For interests acquired on or after 22 March 2006, the charge only applies to immediate post-death interests, disabled person's interests, transitional serial interests, or interests falling within section 5(1B).
• Where a transaction between the trustees and a connected person reduces the value of the settled property, a corresponding part of the interest is treated as coming to an end, and if only part of an interest terminates, tax is charged on a proportionate part of the property value.