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HMRC internal manual

Inheritance Tax Manual

Pre-owned assets: election into Inheritance Tax: when to make an election

The election must be made on or before ‘the relevant filing date’, or ‘such later date as an officer of HMRC may, in a particular case, allow’ (IHTM44077). The relevant filing date is 31 January in the year of assessment that immediately follows the initial year, FA04/Sch15/Para23(2).

If the chargeable person was subject to income tax from 2005/06, the relevant filing date is 31 January 2007. If they first become subject to the charge in a later year of assessment, the relevant filing date is 31 January in the year of assessment immediately following, so if the chargeable person first became subject to the charge during the year 2007/08, the relevant filing date will be 31 January 2009.

The election takes effect for inheritance tax purposes from the date on which the chargeable person would have first become chargeable under this Schedule but for the election. The earliest year it can take effect is the year beginning 6 April 2005.

Where a chargeable person has failed to make an election before they died, their personal representatives are not able to make an election on their behalf. This is because the resulting Inheritance Tax liability would fall on the donee (IHTM30041) and not the personal representatives. The only exception to this is if the chargeable person became subject to the POA charge as a result of the changes in FA06/S80 and died in the period 5 December 2005 to 19 July 2006.