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HMRC internal manual

Inheritance Tax Manual

From
HM Revenue & Customs
Updated
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Pre-owned assets: election into Inheritance Tax: intangibles

In order to avoid the POA charge and elect into Inheritance Tax in respect of intangible property, a person must be

  • subject to the POA charge on intangibles, FA04/Sch15/Para22(1)(a), and
  • must not have been chargeable in any previous year of assessment by reference to the relevant property, or any other property which the relevant property represents or is derived from, FA04/Sch15/Para22(1)(b),

and

  • the relevant property, or property which it represents or is derived from, must remain in the settlement, and
  • any income arising under the settlement would be treated by virtue of ITTOIA05/S624 as income of the chargeable person.

The chargeable person may then elect that the relevant property, or property which it represents or is derived from, shall not be subject to the POA charge, but is to be treated as property subject to a reservation and FA86/S102(3) & (4) shall apply, unless they are beneficially entitled to an interest in possession in which case the effect of the election is that IHTA1984/S53(3) & (4) and 54 (IHTM44050) are not to apply to the property.

There is no concept of a chargeable portion for intangible property.

Note that in order to make an election, a person must have been subject to the POA charge. So, if the taxable benefit is below the de minimis limit (IHTM44056), it is not possible to make an election. For this reason, no time limit (IHTM44075) runs until such time as there is a taxable benefit.