‘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.