IHTM04380 - Value left out of account: foreign currency bank accounts

IHTA84/S157 excludes from the charge on death only the balance on a ‘qualifying foreign currency account’ of certain depositors: 

  • For deaths on or after 6 April 2025, the exclusion applies if the depositor was neither resident or long-term UK resident (IHTM47000) immediately before they died. 

  • For deaths before 6 April 2025, the exclusion applies if the depositor was neither domiciled (IHTM13000) in the UK for Inheritance Tax purposes nor resident (or ordinarily resident if the death was before 6 April 2013) here for Income Tax purposes at the time of their death.  

There is a corresponding exclusion for the balance on such an account held by trustees on the death of a beneficiary who had a qualifying interest in possession (IHTM16062) in it: 

  • For deaths on or after 6 April 2025, the exclusion applies if the beneficiary was neither resident nor long-term UK resident (IHTM47000) immediately before they died. 

  • For deaths before 6 April 2025, the exclusion applies if the beneficiary was neither domiciled (IHTM13000) in the UK for Inheritance Tax purposes nor resident (or ordinarily resident if the death was before 6 April 2013) here for Income Tax purposes at the time of their death. 

In addition, the trustees must not be resident in UK at the time of the beneficiary’s death and the settlor: 

    • Is alive and is not a long-term UK resident; or 

    • Died on or after 6 April 2025 and was not a long-term UK resident at their death; or 

    • Died before 6 April 2025 and was not domiciled in the UK when the property became comprised in the settlement. 

Under FA96/SCH37/PARA12 a qualifying account is defined as ‘a foreign currency account with a bank or the Post Office’. A foreign currency account is one that is denominated in a currency other than Sterling and under ICTA88/S840A a ‘bank’ means

  • the Bank of England
  • an institution authorised under the Banking Act 1987
  • a relevant European institution
  • any international organisation designated as a Bank by Treasury Order.

Where the conditions are met, the balance on the account, whether in credit or in debit should be left out of account. You should refer any case of difficulty, especially if you are seeking to disallow a debit balance, to Technical.