Capital Acquisitions Tax Consolidation Act 2003 section 34

Settlement of an interest not in possession

Section 34 prevents a person from avoiding Capital Acquisitions Tax on the vesting of a future interest by settling that interest on themselves under a self-made disposition.

• Where a person holds a future interest in property (e.g. a remainder interest expectant on a death or the expiry of a fixed period), and settles that interest on themselves, tax is charged as if the self-made settlement had never been made.
• The exemption under section 83 for self-made dispositions cannot be used to defeat the tax charge that would otherwise arise when the future interest falls into possession.
• The same principle applies where property was originally received subject to a liability (such as an annuity) within the meaning of section 28(9), and that liability later ceases.
• The charge under this section does not prevent any additional charge to tax arising under the self-made disposition itself — for example, where the property passes on the settler's death to the next beneficiary under that disposition.