Capital Acquisitions Tax Consolidation Act 2003 section 111

Liability to tax in respect of certain sales and mortgages

Section 111 limits the inheritance tax liability of purchasers or mortgagees of future interests (interests in expectancy) that were sold or mortgaged before 1 April 1975, capping their liability at the death duties that would have applied under the law and rates in force at the date of the original sale or mortgage.

• Where a future interest was sold or mortgaged for full consideration before 1 April 1975 and later comes into possession, the purchaser's or mortgagee's inheritance tax liability cannot exceed the death duties that would have been payable under the law and rates applicable at the date of the sale or mortgage.
• Where the interest was mortgaged, any inheritance tax exceeding the capped amount ranks as a charge subsequent to the mortgage, despite the normal priority rules for inheritance tax under section 60(1).
• Any other accountable person (such as a trustee) is only liable for the excess tax to the extent of other trust property or equity of redemption available under the same disposition — they cannot be required to pay more than the remaining trust funds in their hands.
• The rules on accountable persons in section 45(3) do not override the relief given by this section, meaning a purchaser or mortgagee cannot be required to reimburse other accountable persons for tax from which those persons are relieved.