This guidance note considers the circumstances in which an individual may wish to opt out of the pre-owned asset tax (POAT) and how this impacts their inheritance tax (IHT) position.

For discussion of the regime generally, see the Pre-owned asset tax overview guidance note.

An individual subject to POAT can make an election to opt out of the POAT regime in relation to a particular asset. Unless withdrawn or amended on or before the relevant filing date, the election then becomes irrevocable. The downside is that the asset will then form part of the estate for IHT purposes. Separate elections can be made for different assets.

The election is made on form IHT500 and should be submitted by 31 January following the year of assessment for which the POAT charge would otherwise apply. HMRC may accept late elections if the chargeable person can show that an event beyond their control prevented them from sending the election by the relevant filing date.