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HMRC internal manual

Inheritance Tax Manual

Foreign settled property: introduction

Property (IHTM04030) situated abroad and comprised in a settlement (IHTM16042) is excluded property (IHTM04251) unless the settlor was domiciled (IHTM13000) in the UK at the time the settlement was made, IHTA84/S48 (3). In the case of property settled by Will, or under the rules of intestacy, it will be the date of the testator’s or intestate’s death that is relevant.

This does not apply to a reversionary interest (IHTM04281) in that settled property, IHTA84/S48 (3)(a).

Your investigation should follow the principles in IHTM Chapter 9 (IHTM09000) bearing in mind the special factors applicable to excluded property.

There are additional requirements for relevant property trusts (IHTM42161) that fall within certain anti-avoidance provisions, IHTA84/S80 to IHTA84/S82. You will therefore need to determine whether a settlement is a qualifying interest in possession (IIP) (IHTM16062) trust or relevant property trust for Inheritance Tax purposes and, if so, whether the additional requirements apply and (where appropriate) are satisfied. You should refer to Technical any case where these provisions appear to be in point.

Where foreign settled property is excluded property

  • you should not seek to tax that property on the termination or coming to an end (IHTM04084) of a qualifying IIP in the property, IHTA84/S53 (1)
  • if the trusts applying to the property are not a qualifying IIP, then in determining the rate of any relevant property trust charge, you should disregard that property for the period(s) when it was excluded property, IHTA84/S70 (7).