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HMRC internal manual

Inheritance Tax Manual

HM Revenue & Customs
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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 a depositor who was neither domiciled [IHTM13000) in the UK for IHT purposes nor resident or ordinarily resident (IHTM04295) here for Income Tax purposes at the time of his death. There is a corresponding exclusion for the balance on such an account held by trustees on the death of a beneficiary domiciled and resident outside the UK who had an interest in possession (IHTM16000) in it provided the settlor was not domiciled in the UK when the settlement was made and the trustees had no ties with the UK at the time of the beneficiary’s death.

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 otherwise than in 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 TG.

For deaths prior to 29 April 1996, IHTA84/S157 (5) restricted the definition of a qualifying account to a foreign currency account with the Bank of England, the Post Office, or an institution authorised under the Banking Act 1987.