Section 74A Arrangements involving acquisition of interest in settled property etcF1

United Kingdom

(1)

This section applies where—

(a)

one or more persons enter into arrangements,

(b)

in the course of the arrangements—

(i)

an individual (“the individual”) F2... acquires or becomes able to acquire (directly or indirectly) an interest in property comprised in a settlement ( “ the relevant settled property ”), and

(ii)

consideration in money or money's worth is given by one or more of the persons mentioned in paragraph (a) (whether or not in connection with the acquisition of that interest or the individual becoming able to acquire it),

(F3ba)

the individual—

(i)

is a long-term UK resident at any time on or after 6 April 2025 during the course of the arrangements, or

(ii)

acquired the interest, or became able to acquire it, at a time before 6 April 2025 while domiciled in the United Kingdom,

(c)

there is a relevant reduction in the value of the individual's estate, and

(d)

condition A or condition B is met.

(F42)

Condition A is that the relevant settled property is excluded property at any time during the course of the arrangements.

Ignore for this purpose—

(a)

section 48ZA(8) (as it has effect on and after 6 April 2025);

(b)

section 48(3D) (as it had effect before 6 April 2025).

(3)

Condition B is that—

(a)

the settlor was not an individual or a close company at the time the F5relevant settled property became comprised in the settlement, and

(b)

condition A is not met.

(4)

Subsection (6) applies if all or a part of a relevant reduction (“amount A”) is attributable to the value of the individual's section 49(1) property being less than it would have been in the absence of the arrangements.

(5)

“The individual's section 49(1) property” means settled property to which the individual is treated as beneficially entitled under section 49(1) by reason of the individual being beneficially entitled to an interest in possession in the property.

(6)

Where this subsection applies—

(a)

a part of that interest in possession is deemed, for the purposes of section 52, to come to an end at the relevant time, and

(b)

that section applies in relation to the coming to an end of that part as if the reference in subsection (4)(a) of that section to a corresponding part of the whole value of the property in which the interest in possession subsists were a reference to amount A.

(7)

Subsection (8) applies to so much (if any) of a relevant reduction as is not amount A (“amount B”).

(8)

Tax is to be charged as if the individual had made a transfer of value at the relevant time and the value transferred by it had been equal to amount B.

Annotations

Textual amendments

F1: Ss. 74A-74C inserted (20.6.2012 and with effect in accordance with s. 210(5) of the amending Act) by Finance Act 2012 (c. 14), s. 210(3)
F2: Words in s. 74A(1)(b)(i) omitted (6.4.2025) by virtue of Finance Act 2025 (c. 8), Sch. 13 paras. 12(2)(a), 45(1) (with Sch. 13 para. 45(3))
F3: S. 74A(1)(ba) inserted (6.4.2025) by Finance Act 2025 (c. 8), Sch. 13 paras. 12(2)(b), 45(1) (with Sch. 13 para. 45(3))
F4: S. 74A(2) substituted (6.4.2025) by Finance Act 2025 (c. 8), Sch. 13 paras. 12(3), 45(1) (with Sch. 13 para. 45(3))
F5: Words in s. 74A(3)(a) substituted (with effect in accordance with s. 73(11) of the amending Act) by Finance Act 2020 (c. 14), s. 73(7)(b)

Notes on the whole Act

Textual amendments

F1: By Finance Act 1986 s. 100(1), on and after 25 July 1986 the Capital Transfer Tax Act 1984 may be cited as the Inheritance Tax Act 1984.

Notes on Chapter III

Textual amendments

F1: Words in Pt. 3 Ch. 3 heading added (22.3.2006) by Finance Act 2006 (c. 25), s. 156, Sch. 20 para. 20(5)

Modifications

C1

See Finance Act 1990 s. 126—exemption for pools payments to trustees for football ground improvements in respect of events on or after 6April 1990.

C2

Pt. 3 Ch. 3 modified (22.7.2004) by Finance Act 2004 (c. 12), s. 283, Sch. 36 para. 57(1) (with s. 283(5))

C3

Pt. 3 Ch. 3 modified (22.7.2004) by Finance Act 2004 (c. 12), s. 283, Sch. 36 para. 56(2)(b) (with s. 283(5))

C4

Part III Chapter III (ss.58-85) excluded by Finance Act 1991 (c.31, SIF 63:1), s. 121(4).

Pt. III Ch. III (ss. 58-85) restricted (3.5.1994) by 1994 c. 9, s. 248