According to the UK's Chartered Institute of Taxation, there had previously been uncertainty about the position when a pre-22 March 2006 life interest comes to an end and is replaced before 5 April 2008 by another life interest in favour of the same life tenant. Draft legislation has now been published by the UK government to make it clear that, in these circumstances, there is no chargeable transfer and therefore no inheritance tax payable. Under Finance Act 2006, where a person had an interest in possession in settled property at 22 March 2006, the interest could be terminated in favour of a continuing interest in possession either for the same or another beneficiary and the old inheritance tax rules would apply. This “transitional regime” was due to expire on 5 April 2008, following which it would no longer be possible to substitute one interest in possession for another without a chargeable transfer arising, otherwise than on death of one of the spouses. It has been announced that the 5 April 2008 deadline is to be extended to 5 October 2008 in relation to the reorganisation of interest in possession trusts. Some consequential revisions to capital gains tax have also been made, which will prevent a claim for inheritance tax relief on the second death retrospectively changing the capital gains tax bill on an earlier disposal of an asset.