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HMRC internal manual

Inheritance Tax Manual

From
HM Revenue & Customs
Updated
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Foreign property: specific British Government Securities: exempt securities in unadministered estates

IHTA84/S91 says that for Inheritance Tax, a person with an interest in possession (absolute or limited) in all or part of a deceased person’s residuary estate is treated as having a corresponding direct interest in the net assets for the time being held in the residuary estate. So, any exempt securities included in an unadministered estate can qualify as excluded property if they are transferred by someone entitled to an interest in possession in that estate, depending on:

  • what conditions those securities were issued under IHTM27241 and
  • that person satisfying those conditions.

Example

Sharon dies leaving her residuary estate to Boris and Clive equally. Before the estate has been administered, Clive - who is domiciled and ordinarily resident abroad - assigns his interest in the estate to the trustees of a discretionary trust. At the time of the assignment the estate includes holdings of exempt securities and some other UK assets.

Clive’s assignment is a transfer of value, which is not a PET. For the purpose of determining the value transferred, Clive’s interest in exempt securities included in Sharon’s estate is excluded property, so the securities are left out of Clive’s estate. The value is worked out by reference to the remaining assets.