Inheritance Tax Act 1984 section 99

Transfers where participators are trustees

Section 99 deals with how the close company transfer of value rules apply when one of the company's participators holds their interest as a trustee of a settlement, rather than as an individual.

• Where a participator in a close company holds that interest as a trustee, they are not treated as an individual making a personal transfer of value under section 94(1); instead, the charge is routed through the settlement trust rules.
• If the settled property has a qualifying interest in possession, a proportionate part of that interest is treated as coming to an end when the company makes its transfer, triggering a charge under the relevant settlement provisions.
• If there is no qualifying interest in possession, the trustees are treated as having made a disposition reducing the value of the settled property by the apportioned amount, triggering a charge under the discretionary trust rules.
• The taxable amount is reduced by any increase in the value of the settled property resulting from the company's transfer, ignoring the value of any rights or interests the trust holds in the company itself.

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