Section 55 Termination of life interest etc.C1
United Kingdom
F1On the termination, on the death of the person entitled to it, of a life interest in possession in all or any part of settled property—
the whole or a corresponding part of each of the assets forming part of the settled property and not ceasing at that time to be settled property shall be deemed for the purposes of this Act at that time to be disposed of and immediately reacquired by the trustee for a consideration equal to the whole or a corresponding part of the market value of the asset; but
no chargeable gain shall accrue on that disposal.
For the purposes of this subsection a life interest which is a right to part of the income of settled property shall be treated as a life interest in a corresponding part of the settled property.
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Subsection (1) above shall apply where the person entitled to a life interest in possession in all or any part of settled property dies (although the interest does not then terminate) as it applies on the termination of such a life interest.
In this section “life interest” in relation to a settlement—
includes a right under the settlement to the income of, or the use or occupation of, settled property for the life of a person other than the person entitled to the right, or for lives,
does not include any right which is contingent on the exercise of the discretion of the trustee or the discretion of some other person, and
subject to subsection (5) below, does not include an annuity, notwithstanding that the annuity is payable out of or charged on settled property or the income of settled property.
In this section the expression “life interest” shall include entitlement to an annuity created by the settlement if—
some or all of the settled property is appropriated by the trustees as a fund out of which the annuity is payable, and
there is no right of recourse to settled property not so appropriated, or to the income of settled property not so appropriated,
and, without prejudice to subsection (6) below, the settled property so appropriated shall, while the annuity is payable, and on the occasion of the death of the annuitant, be treated for the purposes of this section as being settled property under a separate settlement.
If there is a life interest in a part of the settled property and, where that is a life interest in income, there is no right of recourse to, or to the income of, the remainder of the settled property, the part of the settled property in which the life interest subsists shall while it subsists be treated for the purposes of this section as being settled property under a separate settlement.
Annotations
Textual amendments
- F1
S. 55(1)(a)(b) and the words commencing s. 55(1) substituted for words by Finance Act 1982 (c. 39, SIF 63:2), s. 84(1) in relation to interests terminating on or after 6 April 1982
- F2
S. 55(2) repealed by Finance Act 1982 (c. 39, SIF 63:2), ss. 84, 157 and Sch. 22 Part VI in relation to interests terminating on or after 6 April 1982
Modifications
- C1
See Finance Act 1988 (c. 39, SIF 63;1, 2), ss. 100, 109 and Sch. 10
Notes on the whole Act
Textual amendments
- F1
Act repealed (6.3.1992 with effect as mentioned in s. 289(1)(2) of the repealing Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 289, 290, Sch.12 (with s. 201(3), Sch. 11 paras. 20, 22, 26(2), 27 and with saving in Sch. 11 para. 24(2)) and subject to an amendment (prosp.) by Museum and Galleries Act 1992 (c. 44), s. 11(2), Sch. 8 Pt. I para. 1(1)(2)(7), and amendments by: Disability Living Allowance and Disability Working Allowance Act 1991 (c. 21), s. 4(2), Sch. 2 para. 9(1)(2) (in force 6.4.1992 by S.I. 1991/2617, art. 2(f)); S.I. 1991/2874, art. 2 (in force 6.4.1992 by S.R. 1992/94, art. 2); Social Security (Consequential Provisions) Act 1992 (c. 6), s. 4, Sch. 2 para. 52(a)(b) (in force 1.7.1992 by s. 7(2) of the amending Act); Social Security (Consequential Provisions) (Northern Ireland) Act 1992 (c. 9), s. 4, Sch. 2 para. 20(a)(b) (in force 1.7.1992 by s. 7(2) of the amending Act); Finance (No. 2) Act 1992 (c. 48), ss. 35(2), 47, 48, 56, 77, Sch. 9 para. 20(1)(inserting ss. 143A and 143B), Sch. 17 paras. 3, 6(2)(5), 7, (the amendments coming into force 16.7.1992 except for the amendment by s. 56, Sch. 9 para. 20(1) which comes into force on 19.2.1993 by S.I. 1993/236, art. 2); and amendments (retrospective to 1.1.1992) by ss. 35(2), 47, 48 of the same 1992 Act, and amendments (27.7.1993 with effect as mentioned in ss. 84(3), 86(4), 88(4), 105(4) of the amending Act) by 1993 c. 34, ss. 84(3), 86(4), 88(4)(a)(b), 105(3)(4)