Taxation of Chargeable Gains Act 1992 section 73

Death of life tenant: exclusion of chargeable gain

Section 73 provides relief from chargeable gains when settled property becomes absolutely entitled to a beneficiary on the death of a person who held an interest in possession in that property.

• When a life tenant dies and a beneficiary becomes absolutely entitled to settled property, no chargeable gain arises on the deemed disposal by the trustees, unless a previous hold-over claim was made
• If the property reverts to the original settlor on the life tenant's death, the disposal is treated as giving rise to neither a gain nor a loss, preserving the original acquisition date if before 31 March 1982
• Where the life tenant's interest related to only part of the settled property, the chargeable gain is reduced proportionately rather than being fully exempted
• For interests in possession created on or after 22 March 2006, the exemption is restricted to qualifying trust types including immediate post-death interests, transitional serial interests, disabled person's interests, trusts for bereaved minors, accumulation and maintenance trusts, and age 18-to-25 trusts