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HMRC internal manual

Inheritance Tax Manual

Foreign settled property: introduction

Property (IHTM04030) situated abroad and comprised in a settlement (IHTM16000) 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 Section 9 (IHTM09000) bearing in mind the special factors (IHTM04251) relevant to excluded property.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

There are additional requirements for discretionary trusts that fall within certain anti-avoidance provisions, (IHTM16000) IHTA84/S80 to IHTA84/S82. You will therefore need to determine whether a settlement is an interest in possession (IIP) (IHTM16000) trust or discretionary trust for IHT purposes and, if so, whether the additional requirements are relevant and (where appropriate) satisfied. You should refer any case where these provisions appear to be in point to TG.

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 an IIP in the property, IHTA84/S53 (1)
  • if the trusts applying to the property are discretionary then in determining the rate of any discretionary trust charge, you should disregard that property for the period(s) when it was excluded property, IHTA84/S70 (7).