IHTM30112 - The settlor: limitations on settlor's liability

The settlor may be liable for tax on

• a lifetime cesser of an interest in possession ( IHTM30281), whether the cesser is a PET or chargeable when made and
• charges under the discretionary trust ( IHTM16042) regime.

Under IHTA84/S201 (1)(d) the settlor is liable if two basic conditions are satisfied

• the transfer takes place during the settlor’s lifetime and
• the trustees are for the time being resident outside the UK.

These two conditions are basic. If they are not satisfied, the settlor cannot be liable under IHTA84/S201 (1)(d). But if the conditions are satisfied, the settlor is not necessarily liable. IHTA84/S201 contains three subsections excluding liability under IHTA84/S201 (1)(d) in situations relating to PETs ( IHTM30113) and where a settlement was made before 11 December 1974 ( IHTM30115).