‘Interest in possession’ is a concept of general
law. There is a statutory definition in Scotland (
IHTM16071), but not in England and
Wales or Northern Ireland.
A ‘qualifying interest in possession’ is defined
in IHTA84/S59 as an interest in possession to which an individual
(or exceptionally, where IHTA84/S59 (2) applies, a company) is
beneficially entitled.
Where the individual becomes beneficially entitled to the
interest in possession, on or after 22 March 2006, it will only be
a ‘qualifying interest in possession’ if it is an
immediate post-death interest, a disabled person’s interest
or a transitional serial interest (
IHTM16061).
But these definitions do not tell us what an interest in
possession is.
The main authority for the definition of an interest in
possession is the House of Lords case Pearson v IRC: a person has
an interest in possession when they have ‘a present right of
present enjoyment’ or an immediate right to the income or
enjoyment of property (irrespective of whether the property
produces income).
In contrast, the beneficiary (or object) under a non-interest
in possession settlement has only the right to be considered by the
trustees if and when they distribute any income or benefits.
