Inheritance Tax Act 1984 section 59

Qualifying interest in possession

Section 59 defines what counts as a "qualifying interest in possession" for inheritance tax purposes, covering interests held by individuals and, in limited circumstances, by companies.

• An individual's interest in possession is a qualifying interest in possession automatically if they became entitled before 22 March 2006; if they became entitled on or after that date, it only qualifies if it is an immediate post-death interest, a disabled person's interest or a transitional serial interest.
• A company can hold a qualifying interest in possession, but only if its business consists wholly or mainly of acquiring interests in settled property, and it purchased the interest at full value from an individual who was beneficially entitled to it.
• Where the company acquired the interest before 14 March 1975, the business condition is relaxed: it need only have been met at the time of acquisition, and authorised long-term insurance companies are exempt from the condition altogether.
• There is no statutory definition of "interest in possession" itself; the leading authority is the House of Lords decision in Pearson v IRC, which established that the holder must have a present right of present enjoyment of the trust property.