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HMRC internal manual

Inheritance Tax Manual

Government securities in foreign ownership: FOTRA gilts as partnership assets

Very occasionally the assets of a partnership (IHTM25091) may include FOTRA gilts (IHTM04291) which will normally constitute excepted assets (IHTM25351) and so fall outside the scope of business relief (IHTM25131).

In this situation if a partner who is not resident in the UK (IHTM04295) and, where appropriate, meets any conditions concerning ordinary residence and domicile (IHTM04296), transfers their interest in the partnership, the interest will be excluded property (IHTM04251) to the extent that it is attributable to the FOTRA gilts. You should calculate the amount to be excluded as follows:

(Value of exempt securities X Value of transferor’s partnership interest) ÷ Total value of partnership