IHTM04286 - Reversionary interests: reversions and foreign issues

A reversionary interest (IHTM16231) is an item of property, (IHTM04030) separate from the property in which the interest subsists.Ìý
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If the reversionary interest is itself situated (IHTM27071) outside the UK then, unless the interest is excluded by the main provision in IHTA84/S48 (1), you should proceedÌýas followsÌý

  • an unsettled reversion will be excluded property (IHTM04251) if the transferor is not a long-term UK resident (IHTM47000) (transfers on or after 6 April 2025) or was domiciled (IHTM13000) abroadÌý(transfers before 6 April 2025), IHTA84/S6 (1),Ìý

  • a reversion which is itself comprisedÌýin a settlement (IHTM16042) will be excludedÌýproperty:ÌýÌý

    • at times when the settlor of the reversion is not a long-term UK resident;Ìý

    • if the settlor of the reversion dies on or after 6 April 2025, if they were not a long-term UK resident immediatelyÌýbefore their death; orÌý

    • if the settlor바카라 사이트¯of the reversion died before 6 April 2025 and was domiciled abroad when the reversion became comprisedÌýin the settlement, IHTA84/S48 (3).Ìý

The situs or locality of a reversionary interest will normally be determinedÌýby the residence of the trustee(s) of the property to which the interest relates.Ìý
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Example 1

Mr Richer transfers £100,000 to trustees in Spain on trust for바카라 사이트¯Emily for life with remainderÌýto his wife, Mrs Richer. Some years later, while Emily is alive, Mrs바카라 사이트¯Richer dies when she is not a long-term UK resident and bequeaths all her estate (including her reversionary interest under her husband바카라 사이트™s settlement) to her son Miles.Ìý
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Because바카라 사이트¯Mrs Richer바카라 사이트™s바카라 사이트¯is the settlor's spouse,바카라 사이트¯the reversion is not excluded from her estate by IHTA84/S48 (1) on her death. But the exclusion provided by IHTA84/S6 (1) applies as both the locality of the reversionÌýis outside the UKÌýand Mrs RicherÌýis not a long-term UK resident.
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Example 2Ìý
The facts are as Example 1 and바카라 사이트¯Miles sells the inherited reversion to Diego. The latter, alsoÌýnot a long-term UK resident, immediatelyÌýsettles the purchased reversion on discretionary trusts.Ìý
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The reversion now comprisedÌýin Diego바카라 사이트™s settlement, although purchasedÌýby the settlor and therefore outside the protection of IHTA84/S48 (1), is (whilst it remainsÌýa reversionary interest) excluded property in view ofÌýthe overseas residence of the trustees of Mr Richer바카라 사이트™s settlementÌýand Diego not being a long-term UK resident. If Diego later became a long-term UK resident, the settled reversion would no longer be excluded property.Ìý