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As a result of the IHT rules treating a qualifying interest in possession (QIIP) as equivalent to absolute ownership, the opportunity to convert settled property to excluded property by investing in exempt government securities is more readily available to interest in possession settlements than to ones with no interest in possession. In addition, no IHT charge arises from the conversion where settled property subject to an interest in possession is concerned.

Settled exempt government securities are excluded property if a person who (in certain cases) is not domiciled (see I9.201) in the UK and (in all cases) not resident in the UK, is entitled to a QIIP in the settlement¹.

For information on the other categories of excluded and exempt property for IHT see I9.311.

A QIIP is an interest in possession to which an individual is beneficially entitled — see I5.203.

If an annuitant (or other person entitled to part only of the income of the settled property) domiciled and resident abroad dies, or if his interest terminates at a time when