Inheritance Tax Act 1984 section 57

Application of certain exemptions

Section 57 extends certain inheritance tax exemptions — the annual exemption and the marriage/civil partnership gift exemption — to situations where an interest in possession in a trust comes to an end, subject to a formal notice requirement.

• The annual exemption (section 19) and the marriage/civil partnership gift exemption (section 22) can apply when an interest in possession in settled property is terminated, not just to outright transfers of value.
• When section 22 applies to the termination of an interest in possession, its references are adapted: gifts become terminations, outright gifts become cases where property leaves the trust entirely, and settled gifts become cases where property remains in trust.
• These exemptions only apply if the person whose interest is terminated gives the trustees a formal notice, in the prescribed form, within six months of the transfer of value, specifying the exemption being claimed and to what extent.
• The exemption for maintenance funds for historic buildings (section 27) also applies where the value transferred remains within a settlement after the transfer, just as it would where property first enters a settlement.