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I5.221 Lifetime termination of QIIP—general

Lifetime charges on settled property that is subject to qualifying interest in possession (QIIP) are imposed by a set of rules which are separate from but parallel to those relating to dispositions of free estate. These rules provide that a disposition of all or part (I5.223) of a QIIP is not a transfer of value by the trustees but is treated as the coming to an end of the interest in possession. This termination is treated as being a transfer of value by the person beneficially entitled to the interest (often called the 'life tenant'), the value transferred being the value of the property in which his interest subsisted¹.

A lifetime termination of the beneficiary's interest will sometimes be treated as a chargeable lifetime transfer (CLT) by the former life tenant (where, say, the trust fund continues on further trusts).

A transfer will however be a potentially exempt transfer (PET) where: