When a qualifying interest in possession (IIP) (IHTM16062) in settled property comes to an end during the lifetime of the person entitled to it, IHTA84/S52 (1) states that the value for IHT purposes is ‘equal to the value of the property in which their interest subsisted.’ By virtue of IHTA84/S51 (1)(b) this applies equally to a lifetime disposal of a qualifying IIP.

The primary effect of these words is that the ‘loss to the estate’ (IHTM04054) principle does not apply to either lifetime charges or failed PETs (IHTM04057) relating to IIPs.