Excluded property: introduction
The term ‘excluded property’ is a technical term and covers certain types of property (IHTM04030) which, subject to certain conditions, are outside the charge to IHT. The exclusion applies to
- property transferred in the lifetime, IHTA84/S3 (2),
- owned by individuals at death, IHTA84/S5 (1), and
- property held in a settlement, IHTA84/S53 (1) and IHTA84/S58 (1)(f)
If you are dealing with a deduction for ‘excluded property’, your investigation will in the main need to consider one or more of the following
- the title to and nature of the property concerned, e.g. whether it is owned outright or settled, or whether it is a reversionary interest (IHTM04281)
- the locality (IHTM27071) of the property
- the identity of the person beneficially entitled (IHTM04031) to the property
- that person’s domicile (IHTM13000) and/or ordinary residence (IHTM13000) where appropriate, and
- in the case of settled foreign property, the settlor’s domicile when he made the settlement. (IHTM16000)
You should establish these or any other relevant facts by reference to the time when the transfer or disposition (IHTM04023) - which would otherwise be within the scope of IHT - was made, unless the legislation points you to any different time.
On 6 April 1996, A transferred US $50,000 to his daughter, and he died in 1998 domiciled in the UK.
In determining whether the lifetime transfer was of excluded property, you should establish the locality of the cash transferred and A’s domicile as at 6 April 1996. Any subsequent dealing with the cash (e.g. its investment in the UK) or change in A’s domicile does not normally matter.