Chapter: 2 - Inheritance Tax Mitigation: The Basics

Settlor and spouse/civil partner should be excluded

2.3.2

To be effective for IHT purposes the settlor must be excluded from benefit to avoid the GWR regime (FA 1986 s102): see 2.13.1. Note again that there is no pro rata provision. The settlor’s spouse/civil partner can be included, although this will have income tax implications (under ITTOIA 2005 Part 5 Chapter 5) and, before 2008/09, also CGT implications (TCGA 1992 s77, repealed from 2008/09). However, these anti-avoidance provisions will not apply if the spouse/civil partner can benefit only after the settlor’s death.