The settlor must be living at the time the property reverts.
Where the interest in possession arose on or after 22 March
2006, S53(3) will only be relevant where it is a disabled
person’s interest (
IHTM42805) or a transitional serial
interest (
IHTM16060).
The property need not revert to the settlor absolutely - the
exemption applies if the settlor takes an interest in possession,
if:
As in death cases (
IHTM16121) the relief is given if the
settlor’s spouse or civil partner (
IHTM11032), or where the settlor has
died less than two years earlier, the settlor’s widow,
widower or surviving civil partner becomes beneficially entitled to
the settled property, and is domiciled in the United Kingdom.
This relief does not apply if the settlor, spouse or civil
partner [or, where relevant, the widow, widower or surviving civil
partner] has acquired a reversion in the property for a
consideration in money or money’s worth, or where the relief
under IHTA84/S53 (3) or IHTA84/S53 (4) depends upon a reversion
having been transferred into a settlement on or after 10 March
1981.
The termination of an interest qualifying for this relief
from the IHTA84/S52 charge would otherwise be a potentially exempt
transfer. If it were immediately chargeable under IHTA84/S52 it
would be going to a non-interest in possession or non-qualifying
interest in possession settlement and could not
‘revert’, on that event, to the settlor.
Pre-owned assets and reverter-to-settlor trusts
The reverter-to settlor exemptions in S53(3) and 53(4) will
not apply where a person who is beneficially entitled to an
interest in possession has made an election under the pre- owned
assets (POA) legislation in Schedule 15 Finance Act 204 that the
POA income tax charge should not apply in connection with their
interest (
IHTM16121).
