Inheritance Tax Act 1984 section 201

Settled property

Section 201 identifies the persons who are liable for inheritance tax arising on chargeable transfers made in connection with settled property, including trustees, beneficiaries, and in certain circumstances the settlor.

• The trustees bear primary liability, but persons entitled to an interest in possession or who benefit from the settled property or its income are also liable.
• The settlor is liable if alive at the time of the chargeable event and the trustees are not resident in the United Kingdom, subject to certain exemptions for older settlements.
• Where a chargeable transfer is made within seven years of the transferor's death but is not a potentially exempt transfer, the settlor's liability is limited to the tax that would have been due had the transferor died more than seven years after the transfer.
• Trustees are treated as not UK-resident unless the settlement's general administration is ordinarily carried on in the United Kingdom and a majority of the trustees (and of each class of trustees, if applicable) are UK-resident.