Costs incurred by the trustees of a settlement in connection with a transaction involving the settled property are not within any claim for inheritance tax to the extent that such costs are properly payable out of capital.
Accordingly, in the break-up of a fund between life tenant and remainderman, the proportion of the costs attributable to the remainderman’s share is deductible in identifying ‘the value of the property in which (the) interest subsisted’ [i.e. the taxable value]
Costs incurred by a beneficiary and borne by him are not deductible.
Advice should be sought in any case where the treatment of costs on a chargeable lifetime event is in doubt.
