SolvedIHTM04034 | Structure of the charge: what is a general power?
From HM Revenue & Customs · Inheritance Tax Manual
A person is treated as beneficially entitled (IHTM04031) to property (IHTM04030) or money if he or she has a general power which enables him or her, or would so enable if he or she was ‘sui juris’ (had capacity to manage their own affairs) either
to dispose of property other than settled property, or
to charge money on any property other than settled property.
A general power is defined as meaning a power or authority enabling the person by whom it is exercisable to appoint or dispose of property as he thinks fit, IHTA84/S5 (2). A power over settled property is also property (IHTM04030) for the purposes of IHTA84/S272.
The word ‘power’ in the phrase ‘power or authority’ is not used in a technical conveyancing sense, as in power of appointment, but in the sense of capacity (Re Penrose [1933] Ch 793). Thus general power may include the choice of appointing the assets to oneself (Re Penrose above). But you should not regard a person as having a general power to dispose of property merely because he could acquire it for consideration in the open market, or by exercising an option to purchase. Note however that
the option may itself form part of the estate of the person entitled to it, and
The words ‘or would if he were sui juris enable him’ in IHTA84/S5(2) require a person having a general power over unsettled property, but unable to exercise it because of, for example, infancy or mental incapacity, to be treated as beneficially entitled to the property.