Inheritance Tax Manual

IHTM16162 - Foreign Property in a trust: when is foreign property excluded property?

From 6 April 2025 the rules relating toÌý³Ù³ó±ð excluded property (IHTM04251)Ìýstatus of foreign settled property (IHTM04271) changed.바카라 사이트¯Ìý

Chargeable events on or after 6 April 2025바카라 사이트¯Ìý

Foreign property comprisedÌýwithin a settlement is excluded property (IHTM16162) at times on or after 6 April 2025 when:바카라 사이트¯Ìý

• the settlor is living and is not a long-term UK resident (IHTM47000)Ìý

• at times after the settlor바카라 사이트™s death:ÌýÌý

• if the settlor died on or after 6 AprilÌý2025, if the settlor was not a long-term UK resident at their deathÌý

• if the settlor died before 6 April 2025 and was not domiciled in the UK when the property became comprisedÌýin the settlement.바카라 사이트¯Ìý

• A further condition applies to qualifying interest in possession settlements (IHTM16061) which provides that foreign property is only excluded property at times on or after 6 April 2025 if the life tenant is also not a long-term UK resident. This condition does not apply where the settlor died before 6 April 2025.바카라 사이트¯Ìý

Transitional Rule바카라 사이트¯Ìý

Certain qualifying interest in possession and gift with reservation charges do not apply if the settled property was excluded property under the old (pre-6 April 2025) excluded property rules as atÌý30 October 2024 (IHTM47022).바카라 사이트¯â¶Ä¯Ìý

Chargeable events before 6 April 2025바카라 사이트¯Ìý

If the chargeable event arose before 6 April 2025,Ìýforeign property within a settlement was excluded property if the settlor was not domiciled (IHTM13000)Ìýin the UK at the time the property became comprised in the settlement (or in relation to property that was added later, at the time the addition was made).바카라 사이트¯ÌýThe deemed domiciledÌýprovisionsÌýunder IHTA84/S267 applyÌýfor this purpose (IHTM13024).바카라 사이트¯ Further information on additions of property and value to existing settlements can be found at IHTM16074.바카라 사이트¯â¶Ä¯Ìý

ExceptionsÌý

See IHTM13061Ìýwhere the Settlor is a Formerly Domiciled Resident in a year of charge before 6 April 2025.바카라 사이트¯Ìý

See IHTM04286Ìýfor the rules relating to reversionary interests in the property.Ìý

Purchased life interestsÌý

ItÌýbecame clear that UK-domiciled individuals were exploiting this exemption by purchasingÌýinterests in pre-existing trusts originally settled by non-UK바카라 사이트“domiciled settlers. IHTA/S48 (3B),Ìýnow within IHTA/S48ZA(6),Ìýwas originallyÌýintroduced by the Finance Act 2006 to prevent this. This provides that property is not excluded property if:Ìý

• An individual is, or has been, beneficially entitled to an interest in possession in the property at any timeÌý

• At any time after 6 April 2025 while long-term UK resident orÌý

• At any time before that date while domiciled in the UK and,Ìý

• Their entitlement arose directly or indirectly as a result ofÌýa disposition for consideration in money or money바카라 사이트™s worth made on or after 5 December 2005.Ìý

It does not matter whether the consideration was given by the individual with the interest in possession or by someone else; and cases in which an entitlement arose indirectly include entitlements arising under a will or the law relating to intestacy.