IHTM16091 | Termination of interest in possession: the effect of terminating the interest
From HM Revenue & Customs · Inheritance Tax Manual
If the interest has vested in possession, the beneficiary may enjoy it for many years, or - quite commonly - it may be brought to an end while the beneficiary is enjoying it.
The effect of bringing the beneficiary’s interest to an end is that the individual in question ceases to have an interest in possession, and a claim to inheritance tax under () will normally arise if:
the beneficiary became beneficially entitled to the interest in possession before 22 March 2006, or
the beneficiary became beneficially entitled to the interest in possession on or after 22 March 2006 and it is an immediate post-death interest , a disabled person’s interest or a transitional serial interest
The beneficiary will be deemed the transferor.
provides that tax shall not be chargeable under if
the person whose interest comes to an end became beneficially entitled to it before 22 March 2006,
the interest comes to an end on or after that date, and
immediately before it comes to an end, S71A (trusts for bereaved minors) or S71D (age 18-to-25 trusts) applies to the property in which the interest subsists.
provides that tax shall not be chargeable under if:
This is a transitional provision relating to the change to long-term UK residence ().