TSEM4554 - Settlements legislation: Inheritance Tax implications of adjustments under ITTOIA/S646(6A)

Since ITTOIA/S646(1) gives a settlor the right to recover from the trustees (or any other person to whom income is payable in connection with the settlement) any income tax chargeable under ITTOIA/S624 and 629, any such payment made to the settlor is not a chargeable occasion for IHT purposes.

Similarly, there is no transfer of value when a settlor makes any payment to the trustees (or any other person to whom income is payable by virtue of or as a result of the settlement) of a repayment of income tax under ITTOIA/S646(5) - see IHTM04250.