Inheritance Tax Act 1984 section 81

Property moving between settlements

Section 81 deals with the inheritance tax treatment of property that moves from one settlement to another, ensuring that it continues to be linked to the original settlement for charging purposes.

• Property transferred between settlements is treated as still belonging to the original settlement for inheritance tax purposes, provided no individual becomes absolutely entitled to it in the meantime.
• This treatment preserves the original settlement's ten-year anniversary cycle and nil-rate band history, preventing trustees from resetting the tax clock by moving assets into a new trust.
• The rules for excluded property under sections 48 and 48ZA continue to apply by reference to the original settlement, not the receiving settlement.
• Transitional rules apply for property that left a settlement before 10 December 1981, with a limited look-back to movements after 26 March 1974 where the same disposition created the transfer into the new settlement.