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

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

An individual subject to pre-owned asset tax (POAT) can make an irrevocable election to opt out of the pre-owned asset tax regime in relation to a particular asset. 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. 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.