IHT400 Notes : Guide to completing your Inheritance Tax account

Definition of a
disabled person
16
IHT400 Notes
Guide to completing your Inheritance Tax account
What is a disabled person's interest?
A disabled person's interest arises where:
• more than half of the assets in a trust in which nobody has a right to
benefit from are applied for the benefit of a disabled person, or
• an individual (the settlor) who is suffering from a condition likely to lead
to them becoming disabled, as described below, sets up a trust using
their own assets and the following conditions apply
— there is no interest in possession during the settlor's life
— any trust property that applies during the settlor's life is applied for
their benefit
— if the trust is brought to an end during the settlor's life the assets
must become the property of the settlor or part of a disabled
person's trust
— a disabled person became entitled to an interest in possession in
a trust that came into existence on or after 22 March 2006
• the beneficiary is a disabled person and the trust was set up on or
after 22 March 2006.
For this purpose a disabled person is a person who:
• is not able to administer their own property or manage their own affairs
because of a mental disorder, within the meaning of the Mental Health
Act 1983, or
• receives an Attendance Allowance under Section 64 of the Social
Security Contributions & Benefits Act 1992 or of the Social Security
Contributions & Benefits (Northern Ireland) Act 1992, or would receive
an Attendance Allowance if they were not prevented from doing so
because they were undergoing treatment for renal failure in hospital, or
• receives a Disability Living Allowance under Section 71 of those Acts
because they are entitled to the care component at the highest or
middle rate, or would be entitled to it if they had not been provided with
certain accommodation, or
• satisfies the HMRC Commissioners that they would have been in
receipt of either benefit had they met the residence conditions.
What is transitional serial interest?
There are two types of transitional serial interest. The first type is where an
interest in possession trust arises on or after 22 March 2006 and before
6 April 2008, but it follows a previous interest in possession that already
existed before 22 March 2006.
The second type is where the interest in possession trust arises on the
death, on or after 22 March 2006, of the holder of a previous interest in
possession and either:
• the new holder is the spouse or civil partner of the previous holder, or
• the settled property consists of a contract of life insurance.
If you would like more information on transitional serial interests, go to
www.hmrc.gov.uk/inheritancetax