Inheritance Tax Act 1984 section 74C

Interpretation of sections 74A and 74B

Section 74C provides the definitions and interpretive rules needed to apply the anti-avoidance provisions in sections 74A and 74B, which target arrangements involving the acquisition of interests in settled property that reduce an individual's estate.

• An individual has an interest in settled property if it is or may become payable to (or for the benefit of) that individual, their spouse or civil partner, or a related close company or its 51% subsidiary — or if any such person enjoys a benefit derived from it.
• A "relevant reduction" in the individual's estate first arises when the estate's value falls below what it would have been without the arrangements, and arises again each time the shortfall exceeds the total of all previous relevant reductions.
• The amount of each relevant reduction is the difference between the actual estate value and the value it would have had without the arrangements, less any previous relevant reductions already counted.
• Key defined terms include "arrangements" (broadly drawn to cover any scheme, transaction, agreement, understanding, or associated operations), "derived property" (income from or proceeds representing the original property), and "the relevant time" (the later of when the relevant reduction occurs or when section 74A first applied).