Inheritance Tax Act 1984 section 74A

Arrangements involving acquisition of interest in settled property etc.

Section 74A is an anti-avoidance provision that charges inheritance tax where a UK-connected individual acquires an interest in settled property through arrangements that reduce the value of their estate, particularly where the settled property would otherwise be excluded property or the settlor was not an individual or close company.

• Where arrangements result in an individual acquiring an interest in settled property for consideration, and the individual's estate is reduced as a result, this section imposes an inheritance tax charge if the settled property is excluded property or the settlor was not an individual or close company.
• The individual must either be a long-term UK resident at any time on or after 6 April 2025 during the arrangements, or must have acquired the interest before 6 April 2025 while domiciled in the United Kingdom.
• If the reduction in value relates to property in which the individual has a qualifying interest in possession, that interest is treated as partly coming to an end, triggering a tax charge on the amount of the reduction attributable to the interest in possession.
• Any remaining part of the reduction in value that is not attributable to the interest in possession is taxed as if the individual had made a transfer of value equal to that remaining amount.