In this Act “reversionary interest” means a future interest under a settlement, whether it is vested or contingent (including an interest expectant on the termination of an interest in possession which, by virtue of section 50 below, is treated as subsisting in part of any property) and in relation to Scotland includes an interest in the fee of property subject to a proper liferent.
48 Excluded property : reversionary interests and Treasury securities.
(1) A reversionary interest is excluded property unless—
(a) it has at any time been acquired (whether by the person entitled to it or by a person previously entitled to it) for a consideration in money or money’s worth, or
(b) it is one to which either the settlor or his spouse or civil partner is or has been beneficially entitled, or
(c) it is the interest expectant on the determination of a lease treated as a settlement by virtue of section 43(3) above or,
(d) in a case where paragraphs (a), (b) and (d) of section 74A(1) are satisfied—
(i) it is a reversionary interest, in the relevant settled property, to which the individual is beneficially entitled, and
(ii) the individual has or is able to acquire (directly or indirectly) another interest in that relevant settled property.
Terms used in paragraph (d) have the same meaning as in section 74A.
(2) In relation to a reversionary interest under a settlement made before 16th April 1976, subsection (1) above shall have effect with the omission of paragraph (b); and, if the person entitled to a reversionary interest under a settlement made on or after 16th April 1976 acquired the interest before 10th March 1981, that subsection shall have effect with the omission of the words “or has been” in paragraph (b).
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3E) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3F) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4) Where securities issued by the Treasury subject to a condition of the kind mentioned in subsection (2) of section 6 above are comprised in a settlement, that subsection shall not apply to them; but the securities are excluded property if—
(a) a person of a description specified in the condition in question is entitled to a qualifying interest in possession in them, or
(b) no qualifying interest in possession subsists in them but it is shown that all known persons for whose benefit the settled property or income from it has been or might be applied, or who are or might become beneficially entitled to an interest in possession in it, are persons of a description specified in the condition in question.
This subsection is subject to Schedule A1.
(5) Where—
(a) property ceased to be comprised in one settlement before 10th December 1981 and after 19th April 1978 and, by the same disposition, became comprised in another settlement, or
(b) property ceased to be comprised in one settlement after 9th December 1981 and became comprised in another without any person having in the meantime become beneficially entitled to the property (and not merely to an interest in possession in the property),
subsection (4)(b) above shall, in its application to the second settlement, be construed as requiring the matters there stated to be shown both in relation to the property comprised in that settlement and in relation to the property that was comprised in the first settlement.
(6) Subsection (5) above shall not apply where a reversionary interest in the property expectant on the termination of a qualifying interest in possession subsisting under the first settlement was settled on the trusts of the second settlement before 10th December 1981.
(7) In this section “qualifying interest in possession” has the same meaning as in Chapter III of this Part of this Act.
48ZA Excluded property: property situated outside the UK etc
(1) If property comprised in a settlement—
(a) is situated outside the United Kingdom, or
(b) is a holding in an authorised unit trust or a share in an open-ended investment company,
this section applies to the property and section 6(1) and (1A) (general excluded property rule) does not.
(2) If the settlor is alive, the property is excluded property at any time when the settlor is not a long-term UK resident.
(3) If the settlor died on or after 6 April 2025, the property is excluded property if the settlor was not a long-term UK resident immediately before they died.
(4) If the settlor died before 6 April 2025, the property is excluded property if the settlor was not domiciled in the United Kingdom when the property became comprised in the settlement.
(5) Subsections (2) and (3) do not apply at any time to property to which section 49(1) (certain interests in possession) applies if, at that time, the person beneficially entitled to the interest is a long-term UK resident.
(6) Subsections (2) to (4) do not apply to property if—
(a) an individual has been beneficially entitled to an interest in possession in the property—
(i) at any time on or after 6 April 2025 while a long-term UK resident, or
(ii) at any time before that date while domiciled in the United Kingdom, and
(b) the entitlement arose directly or indirectly as a result of a disposition made on or after 5 December 2005 for a consideration in money or money's worth.
(7) For the purposes of subsection (6)—
(a) it is immaterial whether the consideration was given by the individual or by anyone else, and
(b) the cases in which an entitlement arose indirectly as a result of a disposition include any case where the entitlement arose under a will or the law relating to intestacy.
(8) Where the conditions in paragraphs (a) to (d) of section 74A(1) (arrangements involving acquisition of interest in settled property etc) are satisfied, none of subsections (2) to (4) applies at the time when the conditions are first satisfied or at any later time to make the relevant settled property (within the meaning of section 74A) excluded property.
(9) If—
(a) an amount is payable in respect of property (“the existing property”) comprised in a settlement, and
(b) the amount represents an accumulation of income which (once accumulated) becomes comprised in the settlement,
subsection (4) has effect in the case of the amount as if the reference to the time when it became comprised in the settlement were to the time when the existing property became comprised in the settlement.
(10) Subsections (2) to (4) are subject to Schedule A1 (overseas property with value attributable to UK residential property or UK agricultural property).
(11) The reference in subsection (1) to property comprised in a settlement does not include a reversionary interest in the property (and accordingly this section does not apply to such an interest and section 6(1) does).
(1) A person beneficially entitled to an interest in possession in settled property shall be treated for the purposes of this Act as beneficially entitled to the property in which the interest subsists.
(1A) Where the interest in possession mentioned in subsection (1) above is one to which the person becomes beneficially entitled on or after 22nd March 2006, subsection (1) above applies in relation to that interest only if, and for so long as, it is—
(a) an immediate post-death interest,
(b) a disabled person's interest, or
(c) a transitional serial interest,
or falls within section 5(1B) above.
(1B) Where the interest in possession mentioned in subsection (1) above is one to which the person became beneficially entitled before 22nd March, subsection (1) above does not apply in relation to that interest at any time when section 71A below applies to the property in which the interest subsists.
(2) Where a person becomes entitled to an interest in possession in settled property as a result of a disposition for a consideration in money or money’s worth, any question whether and to what extent the giving of the consideration is a transfer of value or chargeable transfer shall be determined without regard to subsection (1) above.
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1) Where a person (“L”) is beneficially entitled to an interest in possession in settled property, for the purposes of this Chapter that interest is an “immediate post-death interest” only if the following conditions are satisfied.
(2) Condition 1 is that the settlement was effected by will or under the law relating to intestacy.
(3) Condition 2 is that L became beneficially entitled to the interest in possession on the death of the testator or intestate.
(4) Condition 3 is that—
(a) section 71A below does not apply to the property in which the interest subsists, and
(b) the interest is not a disabled person's interest.
(5) Condition 4 is that Condition 3 has been satisfied at all times since L became beneficially entitled to the interest in possession.
Where a person is beneficially entitled to an interest in possession in settled property, for the purposes of this Chapter that interest is a “transitional serial interest” only—
(a) if section 49C or 49D below so provides, or
(b) if, and to the extent that, section 49E below so provides.
49C Transitional serial interest: interest to which person becomes entitled during period 22nd March 2006 to 5th October 2008
(1) Where a person (“B”) is beneficially entitled to an interest in possession in settled property (“the current interest”), that interest is a transitional serial interest for the purposes of this Chapter if the following conditions are met.
(2) Condition 1 is that—
(a) the settlement commenced before 22nd March 2006, and
(b) immediately before 22nd March 2006, the property then comprised in the settlement was property in which B, or some other person, was beneficially entitled to an interest in possession (“the prior interest”).
(3) Condition 2 is that the prior interest came to an end at a time on or after 22nd March 2006 but before 6th October 2008.
(4) Condition 3 is that B became beneficially entitled to the current interest at that time.
(5) Condition 4 is that—
(a) section 71A below does not apply to the property in which the interest subsists, and
(b) the interest is not a disabled person's interest.
49D Transitional serial interest: interest to which person becomes entitled on death of spouse or civil partner on or after 6th October 2008
(1) Where a person (“E”) is beneficially entitled to an interest in possession in settled property (“the successor interest”), that interest is a transitional serial interest for the purposes of this Chapter if the following conditions are met.
(2) Condition 1 is that—
(a) the settlement commenced before 22nd March 2006, and
(b) immediately before 22nd March 2006, the property then comprised in the settlement was property in which a person other than E was beneficially entitled to an interest in possession (“the previous interest”).
(3) Condition 2 is that the previous interest came to an end on or after 6th October 2008 on the death of that other person (“F”).
(4) Condition 3 is that, immediately before F died, F was the spouse or civil partner of E.
(5) Condition 4 is that E became beneficially entitled to the successor interest on F's death.
(6) Condition 5 is that—
(a) section 71A below does not apply to the property in which the successor interest subsists, and
(b) the successor interest is not a disabled person's interest.
49E Transitional serial interest: contracts of life insurance
(1) Where—
(a) a person (“C”) is beneficially entitled to an interest in possession in settled property (“the present interest”), and
(b) on C's becoming beneficially entitled to the present interest, the settled property consisted of, or included, rights under a contract of life insurance entered into before 22nd March 2006,
the present interest so far as subsisting in rights under the contract, or in property comprised in the settlement that directly or indirectly represents rights under the contract, is a “transitional serial interest” for the purposes of this Chapter if the following conditions are met.
(2) Condition 1 is that—
(a) the settlement commenced before 22nd March 2006, and
(b) immediately before 22nd March 2006—
(i) the property then comprised in the settlement consisted of, or included, rights under the contract, and
(ii) those rights were property in which C, or some other person, was beneficially entitled to an interest in possession (“the earlier interest”).
(3) Condition 2 is that—
(a) the earlier interest came to an end at a time on or after 6th October 2008 (“the earlier-interest end-time”) on the death of the person beneficially entitled to it and C became beneficially entitled to the present interest—
(i) at the earlier-interest end-time, or
(ii) on the coming to an end, on the death of the person beneficially entitled to it, of an interest in possession to which that person became beneficially entitled at the earlier-interest end-time, or
(iii) on the coming to an end of the second or last in an unbroken sequence of two or more consecutive interests in possession to the first of which a person became beneficially entitled at the earlier-interest end-time and each of which ended on the death of the person beneficially entitled to it, or
(b) C became beneficially entitled to the present interest—
(i) on the coming to an end, on the death of the person entitled to it, of an interest in possession that is a transitional serial interest under section 49C above, or
(ii) on the coming to an end of the second or last in an unbroken sequence of two or more consecutive interests in possession the first of which was a transitional serial interest under section 49C above and each of which ended on the death of the person beneficially entitled to it.
(4) Condition 3 is that rights under the contract were comprised in the settlement throughout the period beginning with 22nd March 2006 and ending with C's becoming beneficially entitled to the present interest.
(5) Condition 4 is that—
(a) section 71A below does not apply to the property in which the present interest subsists, and
(b) the present interest is not a disabled person's interest.
(1) Where the person referred to in section 49(1) above is entitled to part only of the income (if any) of the property, the interest shall be taken to subsist in such part only of the property as bears to the whole the same proportion as the part of the income to which he is entitled bears to the whole of the income.
(2) Where the part of the income of any property to which a person is entitled is a specified amount (or the whole less a specified amount) in any period, his interest in the property shall be taken, subject to subsection (3) below, to subsist in such part (or in the whole less such part) of the property as produces that amount in that period.
(3) The Treasury may from time to time by order prescribe a higher and a lower rate for the purposes of this section; and where tax is chargeable in accordance with subsection (2) above by reference to the value of the part of a property which produces a specified amount or by reference to the value of the remainder (but not where chargeable transfers are made simultaneously and tax is chargeable by reference to the value of that part as well as by reference to the value of the remainder) the value of the part producing that specified amount—
(a) shall, if tax is chargeable by reference to the value of that part, be taken to be not less than it would be if the property produced income at the higher rate so prescribed, and
(b) shall, if tax is chargeable by reference to the value of the remainder, be taken to be not more than it would be if the property produced income at the lower rate so prescribed;
but the value to be taken by virtue of paragraph (a) above as the value of part of a property shall not exceed the value of the whole of the property.
(4) The power to make orders under subsection (3) above shall be exercisable by statutory instrument, which shall be subject to annulment in pursuance of a resolution of the House of Commons.
(5) Where the person referred to in section 49(1) above is not entitled to any income of the property but is entitled, jointly or in common with one or more other persons, to the use and enjoyment of the property, his interest shall be taken to subsist in such part of the property as corresponds to the proportion which the annual value of his interest bears to the aggregate of the annual values of his interest and that or those of the other or others.
(6) Where, under section 43(3) above, a lease of property is to be treated as a settlement, the lessee’s interest in the property shall be taken to subsist in the whole of the property less such part of it as corresponds to the proportion which the value of the lessor’s interest (as determined under Part VI of this Act) bears to the value of the property.
(1) Where a person beneficially entitled to an interest in possession in settled property disposes of his interest the disposal—
(a) is not a transfer of value, but
(b) shall be treated for the purposes of this Chapter as the coming to an end of his interest;
and tax shall be charged accordingly under section 52 below.
(1A) Where the interest disposed of is one to which the person became beneficially entitled on or after 22nd March 2006, subsection (1) above applies in relation to the disposal only if the interest is—
(a) an immediate post-death interest,
(b) a disabled person's interest within section 89B(1)(c) or (d) below, or
(c) a transitional serial interest,
or falls within section 5(1B) above.
(1B) Where the interest disposed of is one to which the person became beneficially entitled before 22nd March 2006, subsection (1) above does not apply in relation to the disposal if, immediately before the disposal, section 71A or 71D below applies to the property in which the interest subsists.
(2) Where a disposition satisfying the conditions of section 11 above is a disposal of an interest in possession in settled property, the interest shall not by virtue of subsection (1) above be treated as coming to an end.
(3) References in this section to any property or to an interest in any property include references to part of any property or interest.
52 Charge on termination of interest in possession.
(1) Where at any time during the life of a person beneficially entitled to an interest in possession in settled property his interest comes to an end, tax shall be charged, subject to section 53 below, as if at that time he had made a transfer of value and the value transferred had been equal to the value of the property in which his interest subsisted.
(2) If the interest comes to an end by being disposed of by the person beneficially entitled to it and the disposal is for a consideration in money or money’s worth, tax shall be chargeable under this section as if the value of the property in which the interest subsisted were reduced by the amount of the consideration; but in determining that amount the value of a reversionary interest in the property or of any interest in other property comprised in the same settlement shall be left out of account.
(2A) Where the interest mentioned in subsection (1) or (2) above is one to which the person became beneficially entitled on or after 22nd March 2006, that subsection applies in relation to the coming to an end of the interest only if the interest is—
(a) an immediate post-death interest,
(b) a disabled person's interest, or
(c) a transitional serial interest,
or falls within section 5(1B) above.
(3) Where a transaction is made between the trustees of the settlement and a person who is, or is connected with,—
(a) the person beneficially entitled to an interest in the property, or
(b) a person beneficially entitled to any other interest in that property or to any interest in any other property comprised in the settlement, or
(c) a person for whose benefit any of the settled property may be applied,
and, as a result of the transaction, the value of the first-mentioned property is less than it would be but for the transaction, a corresponding part of the interest shall be deemed for the purposes of this section to come to an end, unless the transaction is such that, were the trustees beneficially entitled to the settled property, it would not be a transfer of value.
(3A) Where the interest mentioned in paragraph (a) of subsection (3) above is one to which the person mentioned in that paragraph became beneficially entitled on or after 22nd March 2006, that subsection applies in relation to the transaction only if the interest is—
(a) an immediate post-death interest,
(b) a disabled person's interest, or
(c) a transitional serial interest,
or falls within section 5(1B) above.
(4) References in this section or section 53 below to any property or to an interest in any property include references to part of any property or interest; and—
(a) the tax chargeable under this section on the coming to an end of part of an interest shall be charged as if the value of the property (or part) in which the interest subsisted were a corresponding part of the whole; and
(b) if the value of the property (or part) to which or to an interest in which a person becomes entitled as mentioned in subsection (2) of section 53 below is less than the value on which tax would be chargeable apart from that subsection, tax shall be chargeable on a value equal to the difference.
(1) Tax shall not be chargeable under section 52 above if the settled property is excluded property.
(1A) Tax shall not be chargeable under section 52 above if—
(a) the person whose interest comes to an end became beneficially entitled to the interest before 22nd March 2006,
(b) the interest comes to an end on or after that day, and
(c) immediately before the interest comes to an end, section 71A or 71D below applies to the property in which the interest subsists.
(2) Tax shall not be chargeable under section 52 above (except in the case mentioned in subsection (4)(b) of that section) if the person whose interest in the property comes to an end becomes on the same occasion beneficially entitled to the property or to another interest in possession in the property.
(2A) Subsection (2) above applies by virtue of the person becoming beneficially entitled on or after 12 March 2008 to another interest in possession in the property only if that other interest is—
(a) a disabled person's interest, or
(b) a transitional serial interest;
and that is the case irrespective of whether the person's beneficial entitlement to the interest in possession in the property which comes to an end is one which began before, or on or after, 22 March 2006.
(3) Tax shall not be chargeable under section 52 above if the interest comes to an end during the settlor’s life and on the same occasion the property in which the interest subsisted reverts to the settlor.
(4) Tax shall not be chargeable under section 52 above if on the occasion when the interest comes to an end—
(a) the settlor’s spouse or civil partner, or
(b) where the settlor has died less than two years earlier, the settlor’s widow or widower or surviving civil partner,
becomes beneficially entitled to the settled property and is a long-term UK resident.
(4A) Tax shall not be chargeable under section 52 above if—
(a) the settled property became comprised in the settlement before 30 October 2024,
(b) immediately before 30 October 2024, the settled property was excluded property by virtue of section 48(3) or (3A) (as it had effect at that time),
(c) the person whose interest comes to an end became beneficially entitled to the interest before 30 October 2024, and
(d) immediately before the person’s interest in possession in it comes to an end, the settled property—
(i) was situated outside the United Kingdom and was not property to which paragraph 2 or 3 of Schedule A1 applied (overseas property with value attributable to UK residential property or UK agricultural property), or
(ii) was a holding in an authorised unit trust or a share in an open-ended investment company.
(5) Subsections (3) and (4) above shall not apply in any case where—
(a) the settlor or the spouse or civil partner (or in a case within subsection (4)(b), the widow or widower or surviving civil partner) of the settlor had acquired a reversionary interest in the property for a consideration in money or money’s worth, or
(b) their application depends upon a reversionary interest having been transferred into a settlement on or after 10th March 1981.
(6) For the purposes of subsection (5) above a person shall be treated as acquiring an interest for a consideration in money or money’s worth if he becomes entitled to it as a result of transactions which include a disposition for such consideration (whether to him or another) of that interest or of other property.
(7) Where the acquisition of the interest was before 12th April 1978, subsection (5)(a) above shall have effect, so far as it relates to subsection (3) above, with the omission of the reference to the spouse or civil partner of the settlor.
(8) Subsection (6) above shall not apply where the person concerned became entitled to the interest before 12th April 1978.
(1) Where a person is entitled to an interest in possession in settled property which on his death, but during the settlor’s life, reverts to the settlor, the value of the settled property shall be left out of account in determining for the purposes of this Act the value of the deceased’s estate immediately before his death.
(2) Where on the death of a person entitled to an interest in possession in settled property—
(a) the settlor’s spouse or civil partner, or
(b) if the settlor has died less than two years earlier, the settlor’s widow or widower or surviving civil partner,
becomes beneficially entitled to the settled property and is a long-term UK resident, the value of the settled property shall be left out of account in determining for the purposes of this Act the value of the deceased’s estate immediately before his death.
(2A) Where a person becomes beneficially entitled on or after 22nd March 2006 to an interest in possession in settled property, subsections (1) and (2) above apply in relation to the interest only if it is—
(a) a disabled person's interest, or
(b) a transitional serial interest.
(2B) Where—
(a) a person (“B”) becomes beneficially entitled on or after 22nd March 2006 to an interest in possession in settled property,
(b) B dies,
(c) the interest in possession, throughout the period beginning with when B becomes beneficially entitled to it and ending with B's death, is an immediate post-death interest,
(d) the settlor died before B's death but less than two years earlier, and
(e) on B's death, the settlor's widow or widower, or surviving civil partner, becomes beneficially entitled to the settled property and is a long-term UK resident,
the value of the settled property shall be left out of account in determining for the purposes of this Act the value of B's estate immediately before his death.
(2C) Where—
(a) a person who is entitled to an interest in possession in settled property dies,
(b) the settled property became comprised in the settlement before 30 October 2024,
(c) immediately before 30 October 2024, the settled property was excluded property by virtue of section 48(3) or (3A) (as it had effect at that time),
(d) the person became beneficially entitled to the interest before 30 October 2024, and
(e) immediately before the person’s death, the settled property—
(i) was situated outside the United Kingdom and was not property to which paragraph 2 or 3 of Schedule A1 applied (overseas property with value attributable to UK residential property or UK agricultural property), or
(ii) was a holding in an authorised unit trust or a share in an open-ended investment company,
the value of the settled property shall be left out of account in determining for the purposes of this Act the value of the person’s estate immediately before their death.
(2D) Where a person became beneficially entitled to an interest in possession in settled property on or after 22 March 2006, subsection (2C) applies in relation to the interest only if it is—
(a) an immediate post-death interest,
(b) a disabled person’s interest, or
(c) a transitional serial interest,
or falls within section 5(1B) (certain interests acquired with no gratuitous benefit).
(3) Subsections (5) and (6) of section 53 above shall apply in relation to subsections (1), (2) and (2B) above as they apply in relation to section 53(3) and (4) , but as if the reference in section 53(5)(a) above to section 53(4)(b) above were to subsection (2)(b) or (2B) above. .
(4) For the purposes of this section, where it cannot be known which of two or more persons who have died survived the other or others they shall be assumed to have died at the same instant.
54A Special rate of charge where settled property affected by potentially exempt transfer.
(1) If the circumstances fall within subsection (2) below, this section applies to any chargeable transfer made—
(a) under section 52 above, on the coming to an end of an interest in possession in settled property during the life of the person beneficially entitled to it, or
(b) on the death of a person beneficially entitled to an interest in possession in settled property;
and in the following provisions of this section the interest in possession mentioned in paragraph (a) or paragraph (b) above is referred to as “the relevant interest”.
(1A) Where a person becomes beneficially entitled on or after 22nd March 2006 to an interest in possession in settled property, subsection (1)(b) above applies in relation to the person's death only if the interest is—
(a) a disabled person's interest, or
(b) a transitional serial interest.
(2) The circumstances referred to in subsection (1) above are—
(a) that the whole or part of the value transferred by the transfer is attributable to property in which the relevant interest subsisted and which became settled property in which there subsisted an interest in possession (whether the relevant interest or any previous interest) on the making by the settlor of a potentially exempt transfer at any time on or after 17th March 1987 and within the period of seven years ending with the date of the chargeable transfer; and
(b) that the settlor is alive at the time when the relevant interest comes to an end; and
(c) that, on the coming to an end of the relevant interest, any of the property in which that interest subsisted becomes settled property in which no qualifying interest in possession (as defined in section 59 below) subsists . . . ; and
(d) that, within six months of the coming to an end of the relevant interest, any of the property in which that interest subsisted has neither—
(i) become settled property in which a qualifying interest in possession subsists . . . , nor
(ii) become property to which an individual is beneficially entitled.
(3) In the following provisions of this section “the special rate property”, in relation to a chargeable transfer to which this section applies, means the property in which the relevant interest subsisted or, in a case where—
(a) any part of that property does not fall within subsection (2)(a) above, or
(b) any part of that property does not become settled property of the kind mentioned in subsection (2)(c) above,
so much of that property as appears to the Board or, on appeal, to the tribunal to be just and reasonable.
(4) Where this section applies to a chargeable transfer (in this section referred to as “the relevant transfer”), the tax chargeable on the value transferred by the transfer shall be whichever is the greater of the tax that would have been chargeable apart from this section and the tax determined in accordance with subsection (5) below.
(5) The tax determined in accordance with this subsection is the aggregate of—
(a) the tax that would be chargeable on a chargeable transfer of the description specified in subsection (6) below, and
(b) so much (if any) of the tax that would, apart from this section, have been chargeable on the value transferred by the relevant transfer as is attributable to the value of property other than the special rate property.
(6) The chargeable transfer postulated in subsection (5)(a) above is one—
(a) the value transferred by which is equal to the value transferred by the relevant transfer or, where only part of that value is attributable to the special rate property, that part of that value;
(b) which is made at the time of the relevant transfer by a transferor who has in the preceding seven years made chargeable transfers having an aggregate value equal to the aggregate of the values transferred by any chargeable transfers made by the settlor in the period of seven years ending with the date of the potentially exempt transfer; and
(c) for which the applicable rate or rates are one-half of the rate or rates referred to in section 7(1) above.
(7) This section has effect subject to section 54B below.
(1) The death of the settlor, at any time after a chargeable transfer to which section 54A above applies, shall not increase the tax chargeable on the value transferred by the transfer unless, at the time of the transfer, the tax determined in accordance with subsection (5) of that section is greater than the tax that would be chargeable apart from that section.
(2) The death of the person who was beneficially entitled to the relevant interest, at any time after a chargeable transfer to which section 54A above applies, shall not increase the tax chargeable on the value transferred by the transfer unless, at the time of the transfer, the tax that would be chargeable apart from that section is greater than the tax determined in accordance with subsection (5) of that section.
(3) Where the tax chargeable on the value transferred by a chargeable transfer to which section 54A above applies falls to be determined in accordance with subsection (5) of that section, the amount referred to in paragraph (a) of that subsection shall be treated for the purposes of this Act as tax attributable to the value of the property in which the relevant interest subsisted.
(4) Subsection (5) below shall apply if—
(a) during the period of seven years preceding the date on which a chargeable transfer to which section 54A above applies (“the current transfer”) is made, there has been another chargeable transfer to which that section applied, and
(b) the person who is for the purposes of the current transfer the settlor mentioned in subsection (2)(a) of that section is the settlor for the purposes of the other transfer (whether or not the settlements are the same);
and in subsections (5) and (6) below the other transfer is referred to as the “previous transfer”.
(5) Where this subsection applies, the appropriate amount in relation to the previous transfer (or, if there has been more than one previous transfer, the aggregate of the appropriate amounts in relation to each) shall, for the purposes of calculating the tax chargeable on the current transfer, be taken to be the value transferred by a chargeable transfer made by the settlor immediately before the potentially exempt transfer was made.
(6) In subsection (5) above “the appropriate amount”, in relation to a previous transfer, means so much of the value transferred by the previous transfer as was attributable to the value of property which was the special rate property in relation to that transfer.
(7) In this section—
“the relevant interest” has the meaning given by subsection (1) of section 54A above; and
“the special rate property” has the meaning given by subsection (3) of that section.
(1) Where a person makes a disposition by which he acquires a settlement power for consideration in money or money’s worth—
(a) section 10(1) above shall not apply to the disposition;
(b) the person shall be taken for the purposes of this Act to make a transfer of value;
(c) the value transferred shall be determined without bringing into account the value of anything which the person acquires by the disposition; and
(d) sections 18 and 23 to 27 above shall not apply in relation to that transfer of value.
(2) For the purposes of this section, a person acquires a settlement power if he becomes entitled—
(a) to a settlement power,
(b) to exercise, or to secure or prevent the exercise of, a settlement power (whether directly or indirectly), or
(c) to restrict, or secure a restriction on, the exercise of a settlement power (whether directly or indirectly),
as a result of transactions which include a disposition (whether to him or another) of a settlement power or of any power of a kind described in paragraph (b) or (c) above which is exercisable in relation to a settlement power.
(1) Notwithstanding section 5(1) above, where a person entitled to an interest (whether in possession or not) in any settled property acquires a reversionary interest expenctant (whether immediately or not) on that interest, the reversionary interest is not part of his estate for the purposes of this Act.
(2) Section 10(1) above shall not apply to a disposition by which a reversionary interest is acquired in the circumstances mentioned in subsection (1) above . . .
(1) Sections 18 and 23 to 27 above shall not apply in relation to property which is given in consideration of the transfer of a reversionary interest if, by virtue of section 55(1) above, that interest does not form part of the estate of the person acquiring it.
(2) Where a person acquires a reversionary interest in any settled property for a consideration in money or money’s worth, section 18 above shall not apply in relation to the property when it becomes the property of that person on the termination of the interest on which the reversionary interest is expectant.
(3) Sections 23 to 27 above shall not apply in relation to any property if—
(a) the property is an interest in possession in settled property and the settlement does not come to an end in relation to that settled property on the making of the transfer of value, or
(b) immediately before the time when it becomes the property of the exempt body it is comprised in a settlement and, at or before that time, an interest under the settlement is or has been acquired for a consideration in money or money’s worth by that or another exempt body.
(4) In subsection (3)(b) above “exempt body” means a charity, political party or other body within sections 23 to 25 above or the trustees of a settlement in relation to which a direction under paragraph 1 of Schedule 4 to this Act has effect; and for the purposes of subsection (3)(b) there shall be disregarded any acquisition from a charity, political party or body within sections 23 to 25.
(5) For the purposes of subsections (2) and (3) above, a person shall be treated as acquiring an interest for a consideration in money or money’s worth if he becomes entitled to it as a result of transactions which include a disposition for such consideration (whether to him or another) of that interest or of other property.
(6) Nothing in this section shall apply to a transfer of value if or to the extent that it is a disposition whereby the use of money or other property is allowed by one person to another.
(7) Subsection (2) above shall not apply where the acquisition of the reversionary interest was before 16th April 1976; and where the acquisition was on or after that date but before 12th April 1978 that subsection shall have effect—
(a) with the substitution for the words “section 18 above” of the words “sections 18 and 23 to 25 above”, and
(b) with the insertion after the word “person” in both places where it occurs of the words “or body”.
(8) Subsection (3)(b) above shall not apply where the acquisition of the interest was before 12th April 1978; and subsection (5) above shall not apply where the person concerned became entitled to the interest before that date.
(1) Subject to subsection (3) below, references to transfers of value in sections 19 and 22 above shall be construed as including references to events on the happening of which tax is chargeable under section 52 above, and references to the transferor and (in section 22(3) and (4)) to a disposition shall be construed accordingly.
(2) For the purposes of its application, by virtue of subsection (1) above, to the termination of interests in possession in settled property, section 22 above shall have effect as if—
(a) references to transfers of value made by gifts in consideration of marriage or civil partnership were references to the termination of such interests in consideration of marriage or civil partnership;
(b) references to outright gifts were references to cases where the property ceases on the termination to be settled property; and
(c) references to cases where the property is settled by the gift were references to cases where it remains settled property after the termination.
(3) Subsection (1) above shall not apply to a transfer of value—
(a) unless the transferor has in accordance with subsection (4) below given to the trustees of the settlement a notice informing them of the availability of an exemption, and
(b) except to the extent specified in that notice.
(4) A notice under subsection (3) above shall be in such form as may be prescribed by the Board and shall be given before the end of the period of six months beginning with the date of the transfer of value.
(5) Section 27 above shall apply where the value transferred by a transfer of value is attributable to property which immediately after the transfer remains comprised in a settlement as it applies where property becomes comprised in a settlement by virtue of the transfer.
57A Relief where property enters maintenance fund.
(1) Subject to the following provisions, subsection (2) below applies where—
(a) a person dies who immediately before his death was beneficially entitled to an interest in possession in property comprised in a settlement, and
(b) within two years after his death the property becomes held on trusts (whether of that or another settlement) by virtue of which a direction under paragraph 1 of Schedule 4 to this Act is given in respect of the property.
(1A) Where the interest mentioned in subsection (1)(a) above is one to which the person became beneficially entitled on or after 22nd March 2006, subsection (2) below does not apply unless, immediately before the person's death, the interest was—
(a) an immediate post-death interest,
(b) a disabled person's interest, or
(c) a transitional serial interest,
or fell within section 5(1B) above.
(2) Where this subsection applies, this Act shall have effect as if the property had on the death of the deceased become subject to the trusts referred to in subsection (1)(b) above; and accordingly no disposition or other event occurring between the date of the death and the date on which the property becomes subject to those trusts shall, so far as it relates to the property, be a transfer of value or otherwise constitute an occasion for a charge to tax.
(3) Where property becomes held on trusts of the kind specified in paragraph (b) of subsection (1) above as the result of proceedings before a court and could not have become so held without such proceedings, that paragraph shall have effect as if it referred to three years instead of two.
(4) Subsection (2) above shall not apply if—
(a) the disposition by which the property becomes held on the trusts referred to in subsection (1)(b) above depends on a condition or is defeasible; or
(b) the property which becomes held on those trusts is itself an interest in settled property; or
(c) the trustees who hold the property on those trusts have, for a consideration in money or money’s worth, acquired an interest under a settlement in which the property was comprised immediately before the death of the person referred to in subsection (1)(a) above or at any time thereafter; or
(d) the property which becomes held on those trusts does so for a consideration in money or money’s worth, or is acquired by the trustees for such a consideration, or has at any time since the death of the person referred to in subsection (1)(a) above been acquired by any other person for such a consideration.
(5) If the value of the property when it becomes held on the trusts referred to in subsection (1)(b) above is lower than so much of the value transferred on the death of the person referred to in subsection (1)(a) as is attributable to the property, subsection (2) above shall apply to the property only to the extent of the lower value.
(6) For the purposes of this section, a person shall be treated as acquiring property for a consideration in money or money’s worth if he becomes entitled to it as a result of transactions which include a disposition for such consideration (whether to him or another) of that or other property. ]
(1) In this Chapter “relevant property” means settled property in which no qualifying interest in possession subsists, other than—
(a) property held for charitable purposes only, whether for a limited time or otherwise;
(b) property to which section 71, 71A, 71D, 73, 74 or 86 below applies (but see subsection (1A) below) ;
(c) property held on trusts which comply with the requirements mentioned in paragraph 3(1) of Schedule 4 to this Act, and in respect of which a direction given under paragraph 1 of that Schedule has effect;
(d) property which is held for the purposes of a registered pension scheme , a qualifying non-UK pension scheme or asection 615(3) scheme;
(e) property comprised in a trade or professional compensation fund;
(ea) property comprised in an asbestos compensation settlement, . . .
(eb) property comprised in a decommissioning security settlement; and
(f) excluded property.
(1A) Settled property to which section 86 below applies is “relevant property” for the purposes of this Chapter if—
(a) an interest in possession subsists in that property, and
(b) that interest falls within subsection (1B) or (1C) below.
(1B) An interest in possession falls within this subsection if—
(a) an individual is beneficially entitled to the interest in possession,
(b) the individual became beneficially entitled to the interest in possession on or after 22nd March 2006, and
(c) the interest in possession is—
(i) not an immediate post-death interest,
(ii) not a disabled person's interest, and
(iii) not a transitional serial interest.
(1C) An interest in possession falls within this subsection if—
(a) a company is beneficially entitled to the interest in possession,
(b) the business of the company consists wholly or mainly in the acquisition of interests in settled property,
(c) the company has acquired the interest in possession for full consideration in money or money's worth from an individual who was beneficially entitled to it,
(d) the individual became beneficially entitled to the interest in possession on or after 22nd March 2006, and
(e) immediately before the company acquired the interest in possession, the interest in possession was neither an immediate post-death interest nor a transitional serial interest.
(2) The reference in subsection (1)(d) above to property which is . . . held for the purposes of a . . . scheme does not include a reference to a benefit which, having become payable under the . . . scheme, becomes comprised in a settlement.
(2A) For the purposes of subsection (1)(d) above—
(a) property applied to pay lump sum death benefits within section 168(1) of the Finance Act 2004 in respect of a member of a registered pension scheme is to be taken to be held for the purposes of the scheme from the time of the member's death until the payment is made, and
(b) property applied to pay lump sum death benefits in respect of a member of a qualifying non-UK pension scheme or a section 615(3) scheme is to be taken to be so held if the benefits are paid within the period of two years beginning with the earlier of the day on which the member's death was first known to the trustees or other persons having the control of the fund and the day on which they could first reasonably be expected to have known of it.
(3) In subsection (1)(e) above “trade or professional compensation fund” means a fund which is maintained or administered by a representative association of persons carrying on a trade or profession and the only or main objects of which are compensation for or relief of losses or hardship that, through the default or alleged default of persons carrying on the trade or profession or of their agents or servants, are incurred or likely to be incurred by others.
(4) In subsection (1)(ea) above “asbestos compensation settlement” means a settlement—
(a) the sole or main purpose of which is making compensation payments to or in respect of individuals who have, or had before their death, an asbestos-related condition, and
(b) which is made before 24 March 2010 in pursuance of an arrangement within subsection (5) below.
(5) An arrangement is within this subsection if it is—
(a) a voluntary arrangement that has taken effect under Part 1 of the Insolvency Act 1986 or Part 2 of the Insolvency (Northern Ireland) Order 1989,
(b) a compromise or arrangement that has taken effect under section 425 of the Companies Act 1985, Article 418 of the Companies (Northern Ireland) Order 1986 or Part 26 of the Companies Act 2006, or
(c) an arrangement or compromise of a kind corresponding to any of those mentioned in paragraph (a) or (b) above that has taken effect under, or as a result of, the law of a country or territory outside the United Kingdom.
(6) For the purposes of subsection (1)(eb) above a settlement is a “decommissioning security settlement” if the sole or main purpose of the settlement is to provide security for the performance of obligations under an abandonment programme.
(7) In subsection (6)—
“abandonment programme” means an abandonment programme approved under Part 4 of the Petroleum Act 1998 (including such a programme as revised);
“security” has the same meaning as in section 38A of that Act.
(1) In this Chapter “qualifying interest in possession” means—
(a) an interest in possession—
(i) to which an individual is beneficially entitled, and
(ii) which, if the individual became beneficially entitled to the interest in possession on or after 22nd March 2006, is an immediate post-death interest, a disabled person's interest or a transitional serial interest, or
(b) an interest in possession to which, where subsection (2) below applies, a company is beneficially entitled.
(2) This subsection applies where—
(a) the business of the company consists wholly or mainly in the acquisition of interests in settled property, and
(b) the company has acquired the interest for full consideration in money or money’s worth from an individual who was beneficially entitled to it , and
(c) if the individual became beneficially entitled to the interest in possession on or after 22nd March 2006, the interest is an immediate post-death interest, or a disabled person's interest within section 89B(1)(c) or (d) below or a transitional serial interest, immediately before the company acquires it.
(3) Where the acquisition mentioned in paragraph (b) of subsection (2) above was before 14th March 1975—
(a) the condition set out in paragraph (a) of that subsection shall be treated as satisfied if the business of the company was at the time of the acquisition such as is described in that paragraph, and
(b) that condition need not be satisfied if the company —
(i) is an insurance company (within the meaning of Part 2 of the Finance Act 2012), and
(ii) has permission under Part 4A of the Financial Services and Markets Act 2000 to effect or carry out contracts of long-term insurance.
(4) In subsection (3)(b) above “contracts of long-term insurance” means contracts which fall within Part II of Schedule 1 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001.
(1) In this Chapter “ten-year anniversary” in relation to a settlement means the tenth anniversary of the date on which the settlement commenced and subsequent anniversaries at ten-yearly intervals, but subject to subsections (2) to (4) below.
(2) The ten-year anniversaries of a settlement treated as made under section 80 below shall be the dates that are (or would but for that section be) the ten-year anniversaries of the settlement first mentioned in that section.
(3) No date falling before 1st April 1983 shall be a ten-year anniversary.
(4) Where—
(a) the first ten-year anniversary of a settlement would apart from this subsection fall during the year ending with 31st March 1984, and
(b) during that year an event occurs in respect of the settlement which could not have occurred except as the result of some proceedings before a court, and
(c) the event is one on which tax was chargeable under Chapter II of Part IV of the Finance Act 1982 (or, apart from Part II of Schedule 15 to that Act, would have been so chargeable),
the first ten-year anniversary shall be taken to be 1st April 1984 (but without affecting the dates of later anniversaries).
(1) For the purposes of this Chapter two settlements are related if and only if—
(a) the settlor is the same in each case, and
(b) they commenced on the same day,
but subject to subsection (2) below.
(2) Two settlements are not related for the purposes of this Chapter if all the property comprised in one or both of them was immediately after the settlement commenced held for charitable purposes only without limit of time (defined by a date or otherwise).
(1) For the purposes of this Chapter, there is a “same-day addition”, in relation to a settlement (“settlement A”), if—
(a) there is a transfer of value by a person as a result of which the value immediately afterwards of the property comprised in settlement A is greater than the value immediately before,
(b) as a result of the same transfer of value, or as a result of another transfer of value made by that person on the same day, the value immediately afterwards of the property comprised in another settlement (“settlement B”) is greater than the value immediately before,
(c) that person is the settlor of settlement A and settlement B,
(d) at any point in the relevant period, all or any part of the property comprised in settlement A was relevant property, and
(e) at that point, or at any other point in the relevant period, all or any part of the property comprised in settlement B was relevant property.
For exceptions, see section 62B.
(2) Where there is a same-day addition, references in this Chapter to its value are to the difference between the two values mentioned in subsection (1)(b).
(3) “The relevant period” means—
(a) in the case of settlement A, the period beginning with the commencement of settlement A and ending immediately after the transfer of value mentioned in subsection (1)(a), and
(b) in the case of settlement B, the period beginning with the commencement of settlement B and ending immediately after the transfer of value mentioned in subsection (1)(b)).
(4) The transfer or transfers of value mentioned in subsection (1) include a transfer or transfers of value as a result of which property first becomes comprised in settlement A or settlement B; but not if settlements A and B are related settlements.
(5) For the purposes of subsection (1) above, it is immaterial whether the amount of the property comprised in settlement A or settlement B (or neither) was increased as a result of the transfer or transfers of value mentioned in that subsection.
(1) There is not a same-day addition for the purposes of this Chapter if any of the following conditions is met—
(a) immediately after the transfer of value mentioned in section 62A(1)(a) all the property comprised in settlement A was held for charitable purposes only without limit of time (defined by a date or otherwise),
(b) immediately after the transfer of value mentioned in section 62A(1)(b) all the property comprised in settlement B was so held,
(c) either or each of settlement A and settlement B is a protected settlement (see section 62C), and
(d) the transfer of value, or either or each of the transfers of value, mentioned in section 62A(1)(a) and (b)—
(i) results from the payment of a premium under a contract of life insurance the terms of which provide for premiums to be due at regular intervals of one year or less throughout the contract term, or
(ii) is made to fund such a payment.
(2) If the transfer of value, or each of the transfers of value, mentioned in section 62A(1) is not the transfer of value under section 4 on the settlor's death, there is a same-day addition for the purposes of this Chapter only if conditions A and B are met.
(3) Condition A is that—
(a) the difference between the two values mentioned in section 62A(1)(a) exceeds £5,000, or
(b) in a case where there has been more than one transfer of value within section 62A(1)(a) on the same day, the difference between—
(i) the value of the property comprised in settlement A immediately before the first of those transfers, and
(ii) the value of the property comprised in settlement A immediately after the last of those transfers,
exceeds £5,000.
(4) Condition B is that—
(a) the difference between the two values mentioned in section 62A(1)(b) exceeds £5,000, or
(b) in a case where there has been more than one transfer of value within section 62A(1)(b), the difference between—
(i) the value of the property comprised in settlement B immediately before the first of those transfers, and
(ii) the value of the property comprised in settlement B immediately after the last of those transfers,
exceeds £5,000.
(1) For the purposes of this Chapter, a settlement is a “protected settlement” if it commenced before 10 December 2014 and either condition A or condition B is met.
(2) Condition A is met if there have been no transfers of value by the settlor on or after 10 December 2014 as a result of which the value of the property comprised in the settlement was increased.
(3) Condition B is met if—
(a) there has been a transfer of value by the settlor on or after 10 December 2014 as a result of which the value of the property comprised in the settlement was increased, and
(b) that transfer of value was the transfer of value under section 4 on the settlor's death before 6 April 2017 and it had the result mentioned by reason of a protected testamentary disposition.
(4) In subsection (3)(b) “protected testamentary disposition” means a disposition effected by provisions of the settlor's will that at the settlor's death are, in substance, the same as they were immediately before 10 December 2014.
In this Chapter, unless the context otherwise requires—
“payment” includes a transfer of assets other than money;
“quarter” means period of three months.
(1) Where immediately before a ten-year anniversary all or any part of the property comprised in a settlement is relevant property, tax shall be charged at the rate applicable under sections 66 and 67 below on the value of the property or part at that time.
(1A) For the purposes of subsection (1) above, property held by the trustees of a settlement immediately before a ten-year anniversary is to be regarded as relevant property comprised in the settlement at that time if—
(a) it is income of the settlement,
(b) the income arose before the start of the five years ending immediately before the ten-year anniversary,
(c) the income arose (directly or indirectly) from property comprised in the settlement that, when the income arose, was relevant property, and
(d) when the income arose, no person was beneficially entitled to an interest in possession in the property from which the income arose.
(1B) Where the settlor of property comprised in a settlement meets the condition in subsection (1BZA), income of the settlement that arose (directly or indirectly) from the property is not to be regarded as relevant property comprised in the settlement as a result of subsection (1A) above so far as the income—
(a) is situated outside the United Kingdom, or
(b) is represented by a holding in an authorised unit trust or a share in an open-ended investment company.
(1BZA) The condition is that the settlor—
(a) is alive and is not a long-term UK resident immediately before the ten-year anniversary,
(b) died on or after 6 April 2025 and was not a long-term UK resident immediately before their death, or
(c) died before 6 April 2025 and was not domiciled in the United Kingdom when the property became comprised in the settlement.
(1BA) If—
(a) an amount is payable in respect of property (“the existing property”) comprised in a settlement, and
(b) the amount represents an accumulation of income which (once accumulated) becomes comprised in the settlement,
subsection (1BZA)(c) has effect, in the case of the amount, as if any reference to the time it became comprised in the settlement were to the time the existing property became comprised in the settlement.
(1C) Income of the settlement is not to be regarded as relevant property comprised in the settlement as a result of subsection (1A) above so far as the income—
(a) is represented by securities issued by the Treasury subject to a condition of the kind mentioned in subsection (2) of section 6 above, and
(b) it is shown that all known persons for whose benefit the settled property or income from it has been or might be applied, or who are or might become beneficially entitled to an interest in possession in it, are persons of a description specified in the condition in question.
(2) For the purposes of subsection (1) above, a foreign-owned work of art which is situated in the United Kingdom for one or more of the purposes of public display, cleaning and restoration (and for no other purpose) is not to be regarded as relevant property.
(1) There shall be a charge to tax under this section—
(a) where the property comprised in a settlement or any part of that property ceases to be relevant property (whether because it ceases to be comprised in the settlement or otherwise); and
(b) in a case in which paragraph (a) above does not apply, where the trustees of the settlement make a disposition as a result of which the value of relevant property comprised in the settlement is less than it would be but for the disposition.
(2) The amount on which tax is charged under this section shall be—
(a) the amount by which the value of relevant property comprised in the settlement is less immediately after the event in question that it would be but for the event, or
(b) where the tax payable is paid out of relevant property comprised in the settlement immediately after the event, the amount which, after deducting the tax, is equal to the amount on which tax would be charged by virtue of paragraph (a) above.
(3) The rate at which tax is charged under this section shall be the rate applicable under section 68 or 69 below.
(4) Subsection (1) above does not apply if the event in question occurs in a quarter beginning with the day on which the settlement commenced or with a ten-year anniversary.
(5) Tax shall not be charged under this section in respect of—
(a) a payment of costs or expenses (so far as they are fairly attributable to relevant property), or
(b) a payment which is (or will be) income of any person for any of the purposes of income tax or would for any of those purposes be income of a person not resident in the United Kingdom if he were so resident,
or in respect of a liability to make such a payment.
(6) Tax shall not be charged under this section by virtue of subsection (1)(b) above if the disposition is such that, were the trustees beneficially entitled to the settled property, section 10 or section 16 above would prevent the disposition from being a transfer of value.
(7) Tax shall not be charged under this section by reason only that property comprised in a settlement ceases to be situated in the United Kingdom and thereby becomes excluded property by virtue of section 48ZA.
(7A) Tax shall not be charged under this section by reason only that property comprised in a settlement is invested in a holding in an authorised unit trust or a share in an open-ended investment company and thereby becomes excluded property by virtue of section 48ZA.
(7B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(7C) Tax shall not be charged under this section by reason only that property comprised in a settlement ceases to any extent to be property to which paragraph 2 or 3 of Schedule A1 applies and thereby becomes excluded property by virtue of section 48ZA.
(7D) Tax shall not be charged under this section where property comprised in a settlement or any part of that property—
(a) is, by virtue of paragraph 5(2)(a) of Schedule A1, not excluded property for the two year period referred to in that paragraph, but
(b) becomes excluded property at the end of that period.
(8) If the condition in subsection (8ZA) is met in relation to property comprised in a settlement, tax shall not be charged under this section by reason only that the property is invested in securities issued by the Treasury subject to a condition of the kind mentioned in section 6(2) above and thereby becomes excluded property by virtue of section 48(4)(b) above.
(8ZA) The condition is that the settlor—
(a) is alive and is not a long-term UK resident,
(b) died on or after 6 April 2025 and was not a long-term UK resident immediately before they died, or
(c) died before 6 April 2025 and was not domiciled in the United Kingdom when the property became comprised in the settlement.
(8A) If—
(a) an amount is payable in respect of property (“the existing property”) comprised in a settlement, and
(b) the amount represents an accumulation of income which (once accumulated) becomes comprised in the settlement,
subsection (8ZA)(c) has effect, in the case of the amount, as if any reference to the time it became comprised in the settlement were to the time the existing property became comprised in the settlement.
(8B) None of subsections (7), (7A) and (8) applies in relation to property comprised in a settlement if—
(a) a long-term residence change took place at a time—
(i) before the event in question, and
(ii) if there have been one or more ten-year anniversaries before the event in question, after the most recent of them,
(b) the long-term residence change did not result in tax being charged under this section by reference to the property, and
(c) the long-term residence change would have resulted in tax being charged under this section by reference to the property if the property had been property situated outside the United Kingdom when the long-term residence change took place.
(8C) In subsection (8B) “long-term residence change” means—
(a) the settlor not being a long-term UK resident at the start of the tax year 2025-26, or
(b) the settlor ceasing to be a long-term UK resident at the start of any later tax year.
(9) For the purposes of this section trustees shall be treated as making a disposition if they omit to exercise a right (unless it is shown that the omission was not deliberate) and the disposition shall be treated as made at the time or latest time when they could have exercised the right.
(1) Subject to subsection (2) below, the rate at which tax is charged under section 64 above at any time shall be three tenths of the effective rate (that is to say the rate found by expressing the tax chargeable as a percentage of the amount on which it is charged) at which tax would be charged on the value transferred by a chargeable transfer of the description specified in subsection (3) below.
(2) Where the whole or part of the value mentioned in section 64 above is attributable to property which was not relevant property, or was not comprised in the settlement, throughout the period of ten years ending immediately before the ten-year anniversary concerned, the rate at which tax is charged on that value or part shall be reduced by one-fortieth for each of the successive quarters in that period which expired before the property became, or last became, relevant property comprised in the settlement.
(2A) Subsection (2) above does not apply to property which is regarded as relevant property as a result of section 64(1A) (and accordingly that property is charged to tax at the rate given by subsection (1) above).
(3) The chargeable transfer postulated in subsection (1) above is one—
(a) the value transferred by which is equal to an amount determined in accordance with subsection (4) below;
(b) which is made immediately before the ten-year anniversary concerned by a transferor who has in the preceding seven years made chargeable transfers having an aggregate value determined in accordance with subsection (5) below; and
(c) on which tax is charged in accordance with section 7(2) of this Act.
(4) The amount referred to in subsection (3)(a) above is equal to the aggregate of—
(a) the value on which is charged under section 64 above;
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(c) the value, immediately after a related settlement commenced, of the relevant property then comprised in it;
(d) the value of any same-day addition; and
(e) where—
(i) an increase in the value of the property comprised in another settlement is represented by the value of a same-day addition aggregated under paragraph (d) above, and
(ii) that other settlement is not a related settlement,
the value immediately after that other settlement commenced of the relevant property then comprised in that other settlement;
but subject to subsection (6) below.
(5) The aggregate value referred to in subsection (3)(b) above is equal to the aggregate of—
(a) the values transferred by any chargeable transfers made by the settlor in the period of seven years ending with the day on which the settlement commenced, disregarding transfers made on that day or before 27th March 1974, and
(b) the amounts on which any charges to tax were imposed under section 65 above in respect of the settlement in the ten years before the anniversary concerned;
but subject to subsection (6) and section 67 below.
(6) In relation to a settlement which commenced before 27th March 1974—
(a) subsection (4) above shall have effect with the omission of paragraphs (c) to (e) ; and
(b) subsection (5) above shall have effect with the omission of paragraph (a);
and where tax is chargeable under section 64 above by reference to the first ten-year anniversary of a settlement which commenced before 9th March 1982, the aggregate mentioned in subsection (5) above shall be increased by the amounts of any distribution payments (determined in accordance with the rules applicable under paragraph 11 of Schedule 5 to the Finance Act 1975) made out of settled property before 9th March 1982 (or, where paragraph 6, 7 or 8 of Schedule 15 to the Finance Act 1982 applied, 1st April 1983, or, as the case may be, 1st April 1984) and within the period of ten years before the anniversary concerned.
(1) This subsection applies where, after the settlement commenced and after 8th March 1982, but before the anniversary concerned, the settlor made a chargeable transfer as a result of which the value of the property comprised in the settlement was increased.
(2) For the purposes of subsection (1) above, it is immaterial whether the amount of the property so comprised was increased as a result of the transfer, but a transfer as a result of which the value increased but the amount did not shall be disregarded if it is shown that the transfer—
(a) was not primarily intended to increase the value, and
(b) did not result in the value being greater immediately after the transfer by an amount exceeding five per cent. of the value immediately before the transfer.
(3) Where subsection (1) above applies in relation to a settlement which commenced after 26th March 1974, section 66(5)(a) above shall have effect as if it referred to the greater of—
(a) the aggregate of the values there specified, and
(b) the aggregate of the values transferred by any chargeable transfers made by the settlor in the period of seven years ending with the day on which the chargeable transfer falling within subsection (1) above was made—
(i) disregarding transfers made on that day or before 27th March 1974, and
(ii) excluding the values mentioned in subsection (5) below;
and where the settlor made two or more chargeable transfers falling within subsection (1) above, paragraph (b) above shall be taken to refer to the transfer in relation to which the aggregate there mentioned is the greatest.
(4) Where subsection (1) above applies in relation to a settlement which commenced before 27th March 1974, the aggregate mentioned in section 66(5) above shall be increased (or further increased) by the aggregate of the values transferred by any chargeable transfers made by the settlor in the period of seven years ending with the day on which the chargeable transfer falling within subsection (1) above was made—
(a) disregarding transfers made on that day or before 27th March 1974, and
(b) excluding the values mentioned in subsection (5) below; and where the settlor made two or more chargeable transfers falling within subsection (1) above, this subsection shall be taken to refer to the transfer in relation to which the aggregate to be added is the greatest.
(5) The values excluded by subsections (3)(b)(ii) and (4)(b) above are—
(a) any value attributable to property whose value is taken into account in determining the amount mentioned in section 66(4) above; and
(b) any value attributable to property in respect of which a charge to tax has been made under section 65 above and by reference to which an amount mentioned in section 66(5)(b) above is determined.
(6) Where the property comprised in a settlement immediately before the ten-year anniversary concerned, or any part of that property, had on any occasion within the preceding ten years ceased to be relevant property then, if on that occasion tax was charged in respect of the settlement under section 65 above, the aggregate mentioned in section 66(5) above shall be reduced by an amount equal to the lesser of—
(a) the amount on which tax was charged under section 65 (or so much of that amount as is attributable to the part in question), and
(b) the value on which tax is charged under section 64 above (or so much of that value as is attributable to the part in question);
and if there were two or more such occasions relating to the property or the same part of it, this subsection shall have effect in relation to each of them.
(7) References in subsection (6) above to the property comprised in a settlement immediately before an anniversary shall, if part only of the settled property was then relevant property, be construed as references to that part.
(1) The rate at which tax is charged under section 65 above on an occasion preceding the first ten-year anniversary after the settlement’s commencement shall be the appropriate fraction of the effective rate at which tax would be charged on the value transferred by a chargeable transfer of the description specified in subsection (4) below (but subject to subsection (6) below).
(2) For the purposes of this section the appropriate fraction is three tenths multiplied by so many fortieths as there are complete successive quarters in the period beginning with the day on which the settlement commenced and ending with the day before the occasion of the charge, but subject to subsection (3) below.
(3) Where the whole or part of the amount on which tax is charged is attributable to property which was not relevant property, or was not comprised in the settlement, throughout the period referred to in subsection (2) above, then in determining the appropriate fraction in relation to that amount or part—
(a) no quarter which expired before the day on which the property became, or last became, relevant property comprised in the settlement shall be counted, but
(b) if that day fell in the same quarter as that in which the period ends, that quarter shall be counted whether complete or not.
(4) The chargeable transfer postulated in subsection (1) above is one—
(a) the value transferred by which is equal to an amount determined in accordance with subsection (5) below;
(b) which is made at the time of the charge to tax under section 65 by a transferor who has in the period of seven years ending with the day of the occasion of the charge made chargeable transfers having an aggregate value equal to that of any chargeable transfers made by the settlor in the period of seven years ending with the day on which the settlement commenced, disregarding transfers made on that day or before 27th March 1974; and
(c) on which tax is charged in accordance with section 7(2) of this Act.
(5) The amount referred to in subsection (4)(a) above is equal to the aggregate of—
(a) the value, immediately after the settlement commenced, of the relevant property then comprised in it;
(b) the value, immediately after a related settlement commenced, of the relevant property then comprised in it; ...
(c) the value, immediately after it became comprised in the settlement, of property which—
(i) became comprised in the settlement after the settlement commenced and before the occasion of the charge under section 65 above, and
(ii) was relevant property immediately after it became so comprised,
whether or not the property has remained relevant property comprised in the settlement;
(d) the value, at the time it became (or last became) relevant property, of property which—
(i) was comprised in the settlement immediately after the settlement commenced and was not then relevant property but became relevant property before the occasion of the charge under section 65 above, or
(ii) became comprised in the settlement after the settlement commenced and before the occasion of the charge under section 65 above, and was not relevant property immediately after it became comprised in the settlement, but became relevant property before the occasion of the charge under that section,
whether or not the property has remained relevant property comprised in the settlement;
(e) the value of any same-day addition; and
(f) where—
(i) an increase in the value of the property comprised in another settlement is represented by the value of a same-day addition aggregated under paragraph (e) above, and
(ii) that other settlement is not a related settlement,
the value immediately after that other settlement commenced of the relevant property then comprised in that other settlement.
(6) Where the settlement commenced before 27th March 1974, subsection (1) above shall have effect with the substitution of a reference to three tenths for the reference to the appropriate fraction; and in relation to such a settlement the chargeable transfer postulated in that subsection is one—
(a) the value transferred by which is equal to the amount on which tax is charged under section 65 above;
(b) which is made at the time of that charge to tax by a transferor who has in the period of seven years ending with the day of the occasion of the charge made chargeable transfers having an aggregate value equal to the aggregate of—
(i) any amounts on which any charges to tax have been imposed under section 65 above in respect of the settlement in the period of ten years ending with that day; and
(ii) the amounts of any distribution payments (determined in accordance with the rules applicable under paragraph 11 of Schedule 5 to the Finance Act 1975) made out of the settled property before 9th March 1982 (or, where paragraph 6, 7 or 8 of Schedule 15 to the Finance Act 1982 applied, 1st April 1983, or, as the case may be, 1st April 1984) and within the said period of ten years; and
(c) on which tax is charged in accordance with section 7(2) of this Act.
(1) Subject to subsection (2A) below, the rate at which tax is charged under section 65 above on an occasion following one or more ten-year anniversaries after the settlement’s commencement shall be the appropriate fraction of the rate at which it would have been last charged under section 64 if the following were disregarded—
(a) section 66(2) (reduction of rate where value attributable to property that is not comprised in the settlement or is not relevant property), and
(b) Chapters 1 to 2A of Part 5 (business property relief and agricultural property relief).
(2) Subsection (2A) below applies—
(a) if, at any time in the period beginning with the most recent ten-year anniversary and ending immediately before the occasion of the charge under section 65 above (the “relevant period”), property has become comprised in the settlement which was relevant property immediately after it became so comprised, or
(b) if—
(i) at any time in the relevant period, property has become comprised in the settlement which was not relevant property immediately after it became so comprised, and
(ii) at a later time in the relevant period, that property has become relevant property, or
(c) if property which was comprised in the settlement immediately before the relevant period, but was not then relevant property, has at any time during the relevant period become relevant property.
(2A) Whether or not all of the property within any of paragraphs (a) to (c) of subsection (2) above has remained relevant property comprised in the settlement, the rate at which tax is charged under section 65 is to be the appropriate fraction of the rate at which it would last have been charged under section 64 , disregarding section 66(2) and Chapters 1 to 2A of Part 5, if—
(a) immediately before the most recent ten-year anniversary, all of that property had been relevant property comprised in the settlement with a value determined in accordance with subsection (3) below, and
(b) any same-day addition made on or after the most recent ten-year anniversary had been made immediately before that anniversary.
(3) In the case of property within subsection (2)(a) above ...
the value to be attributed to it for the purposes of subsection (2A) above is its value immediately after it became comprised in the settlement; and in any other case the value to be so attributed is the value of the property when it became (or last became) relevant property.
(4) For the purposes of this section the appropriate fraction is so many fortieths as there are complete successive quarters in the period beginning with the most recent ten-year anniversary and ending with the day before the occasion of the charge; but subsection (3) of section 68 above shall have effect for the purposes of this subsection as it has effect for the purposes of subsection (2) of that section.
(1) This section applies to settled property held for charitable purposes only until the end of a period (whether defined by a date or in some other way).
(2) Subject to subsections (3) and (4) below, there shall be a charge to tax under this section—
(a) where settled property ceases to be property to which this section applies, otherwise than by virtue of an application for charitable purposes, and
(b) in a case in which paragraph (a) above does not apply, where the trustees make a disposition (otherwise than by an application of property for charitable purposes) as a result of which the value of settled property to which this section applies is less than it would be but for the disposition.
(3) Tax shall not be charged under this section in respect of—
(a) a payment of costs or expenses (so far as they are fairly attributable to property to which this section applies), or
(b) a payment which is (or will be) income of any person for any of the purposes of income tax or would for any of those purposes be income of a person not resident in the United Kingdom if he were so resident,
or in respect of a liability to make such a payment.
(4) Tax shall not be charged under this section by virtue of subsection (2)(b) above if the disposition is such that, were the trustees beneficially entitled to the settled property, section 10 or section 16 above would prevent the disposition from being a transfer of value.
(5) The amount on which tax is charged under this section shall be—
(a) the amount by which the value of property which is comprised in the settlement and to which this section applies is less immediately after the event giving rise to the charge than it would be but for the event, or
(b) where the tax payable is paid out of settled property to which this section applies immediately after the event, the amount which, after deducting the tax, is equal to the amount on which tax would be charged by virtue of paragraph (a) above.
(6) The rate at which tax is charged under this section shall be the aggregate of the following percentages—
(a) 0.25 per cent. for each of the first forty complete successive quarters in the relevant period,
(b) 0.20 per cent. for each of the next forty,
(c) 0.15 per cent. for each of the next forty,
(d) 0.10 per cent. for each of the next forty, and
(e) 0.05 per cent. for each of the next forty.
(7) Where the whole or part of the amount on which tax is charged under this section is attributable to property which was excluded property at any time during the relevant period then, in determining the rate at which tax is charged under this section in respect of that amount or part, no quarter throughout which that property was excluded property shall be counted.
(8) In subsections (6) and (7) above “the relevant period” means the period beginning with the later of—
(a) the day on which the property in respect of which tax is chargeable became (or last became) property to which this section applies, and
(b) 13th March 1975,
and ending with the day before the event giving rise to the charge.
(9) Where the property in respect of which tax is chargeable—
(a) was relevant property immediately before 10th December 1981, and
(b) became (or last became) property to which this section applies on or after that day and before 9th March 1982 (or, where paragraph 6, 7 or 8 of Schedule 15 to the Finance Act 1982 applied, 1st April 1983 or, as the case may be, 1st April 1984),
subsection (8) above shall have effect as if the day referred to in paragraph (a) of that subsection were the day on which the property became (or last became) relevant property before 10th December 1981.
(10) For the purposes of this section trustees shall be treated as making a disposition if they omit to exercise a right (unless it is shown that the omission was not deliberate) and the disposition shall be treated as made at the time or latest time when they could have exercised the right.
(1) Subject to subsections (1A) to(2) below, this section applies to settled property if—
(a) one or more persons (in this section referred to as beneficiaries) will, on or before attaining a specified age not exceeding eighteen , become beneficially entitled to it . . . , and
(b) no interest in possession subsists in it and the income from it is to be accumulated so far as not applied for the maintenance, education or benefit of a beneficiary.
(1A) This section does not apply to settled property at any particular time on or after 22nd March 2006 unless this section—
(a) applied to the settled property immediately before 22nd March 2006, and
(b) has applied to the settled property at all subsequent times up to the particular time.
(1B) This section does not apply to settled property at any particular time on or after 22nd March 2006 if, at that time, section 71A below applies to the settled property.
(2) This section does not apply to settled property unless either—
(a) not more than twenty-five years have elapsed since the commencement of the settlement or, if it was later, since the time (or latest time) when the conditions stated in paragraphs (a) and (b) of subsection (1) above became satisfied with respect to the property, or
(b) all the persons who are or have been beneficiaries are or were either—
(i) grandchildren of a common grandparent, or
(ii) children, widows or widowers or surviving civil partners of such grandchildren who were themselves beneficiaries but died before the time when, had they survived, they would have become entitled as mentioned in subsection (1)(a) above.
(3) Subject to subsections (4) and (5) below, there shall be a charge to tax under this section—
(a) where settled property ceases to be property to which this section applies, and
(b) in a case in which paragraph (a) above does not apply, where the trustees make a disposition as a result of which the value of settled property to which this section applies is less than it would be but for the disposition.
(4) Tax shall not be charged under this section—
(a) on a beneficiary’s becoming beneficially entitled to, or to an interest in possession in, settled property on or before attaining the specified age, or
(b) on the death of a beneficiary before attaining the specified age.
(5) Subsections (3) to (8) and (10) of section 70 above shall apply for the purposes of this section as they apply for the purposes of that section (with the substitution of a reference to subsection (3)(b) above for the reference in section 70(4) to section 70(2)(b)).
(6) Where the conditions stated in paragraphs (a) and (b) of subsection (1) above were satisfied on 15th April 1976 with respect to property comprised in a settlement which commenced before that day, subsection (2)(a) above shall have effect with the substitution of a reference to that day for the reference to the commencement of the settlement, and the condition stated in subsection (2)(b) above shall be treated as satisfied if—
(a) it is satisfied in respect of the period beginning with 15th April 1976, or
(b) it is satisfied in respect of the period beginning with 1st April 1977 and either there was no beneficiary living on 15th April 1976 or the beneficiaries on 1st April 1977 included a living beneficiary, or
(c) there is no power under the terms of the settlement whereby it could have become satisfied in respect of the period beginning with 1st April 1977, and the trusts of the settlement have not been varied at any time after 15th April 1976.
(7) In subsection (1) above “persons” includes unborn persons; but the conditions stated in that subsection shall be treated as not satisfied unless there is or has been a living beneficiary.
(8) For the purposes of this section a person’s children shall be taken to include his illegitimate children, his adopted children and his stepchildren.