Commentary

I11.715 Excluded property trust and debt

IHT, trusts and estates

I11.715 Excluded property trust and debt

I11.715 Excluded property trust and debt

Background

Settled property may be chargeable to IHT under the relevant property regime. A charge to tax will arise on the value of the settled property on every tenth anniversary of the settlement and an exit charge will arise whenever property comprised in a settlement ceases to be property subject to the relevant property regime.

Non-UK assets held directly by the trustees in a settlement made by a settlor who was neither domiciled nor deemed domiciled in the UK are excluded from inheritance tax under the relevant property regime. Such trusts are called excluded property settlements. However, where the trustees of such a settlement own UK land or other UK assets directly, those assets are (with limited exceptions) property subject to inheritance tax under the relevant property regime. The exit charge will not apply where such settled property ceases to be relevant property by reason of ceasing to be situated in the UK.

The arrangements

The trustees of an excluded property settlement buy a property in the UK and hold it directly. At the ten-year anniversary, the UK property (in the absence of any other arrangements) will be subject to

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