Foreign property: Property excluded from Inheritance Tax: introduction
‘Excluded property’ is a technical term. As its name implies, it covers property of certain types which is effectively outside the charge to Inheritance Tax, subject to certain conditions. The exclusion applies to property transferred during a person’s lifetime (IHTA84/S3 (2) or owned at death by individuals (IHTA84/S5 (1)) and to property held in a settlement (IHTA84/S53 (1) and IHTA84/S58 (1)(f)). Excluded property’ is different from an exempt transfer. Only an exempt transfer is relevant for the purposes of IHTA84/S36 to S42 for grossing up, interaction and so on (IHTM11000).
Remember that you must establish the relevant facts that applied at the time when the transfer or disposition was made, unless the legislation points you to any different time.
On 6 April 2000, Adrian transferred US $50,000 to his daughter. He died in 2012 domiciled in the UK.
In determining whether the lifetime transfer was of excluded property, you should establish the locality of the cash transferred and Adrian’s domicile as at 6 April 2000. Anything that happened to the cash afterwards (for example, its investment in the UK) or any change in Adrian’s domicile following the transfer does not normally matter.