Pre-owned asset tax ― excluded transactions and exemptions

Produced by Tolley

The following Personal Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Pre-owned asset tax ― excluded transactions and exemptions
  • Excluded transactions
  • The disposal condition
  • Part disposals
  • The contribution condition
  • Exemptions
  • The de minimis exemption
  • Property remaining in the individual’s estate
  • Anti-avoidance
  • Availability of IHT exemptions
  • More...

Pre-owned asset tax ― excluded transactions and exemptions

Excluded transactions

No charge to pre-owned assets tax (POAT) can arise in respect of land or chattels if:

  1. the disposal condition would otherwise be met but the transaction whereby the chargeable person disposed of his interest in the asset was an ‘excluded transaction’, or

  2. the contribution condition would otherwise be met but for the fact that the chargeable person provided the consideration given by another person for the acquisition of the asset by means of an ‘excluded transaction’


See the Pre-owned land and Pre-owned chattels guidance notes for full details of the disposal and contribution conditions. Excluded transactions for each of the two conditions are as listed below. Excluded transactions are of no relevance to the charge to POAT in respect of intangible property.

The disposal condition

The disposal condition for land and chattels is not met where the disposal is:

  1. a)

    a disposal of the individual’s whole interest in the property by means of an arm’s length transaction; this could be a disposal to a connected person provided it is on arm’s length terms (see also below under ‘part disposals’)

  2. b)

    a transfer of the property to the individual's spouse / civil partner (or, where the transfer has been ordered by a court, to his former spouse / civil partner)

  3. c)

    a disposal by way of gift (or, where the transfer is for the benefit of his former spouse / civil partner, in accordance with a court order) by virtue of which the property became settled property in which the individual’s spouse/civil partner (or former spouse / civil partner) is beneficially entitled to an interest in possession

  4. d)

    a disposition which is exempt from IHT under IHTA 1984, s 11 (dispositions for maintenance of family), or

  5. e)

    an outright gift to an individual which is covered by the IHT annual exemption (£3,000 per tax year) or the small gifts exemption (up to £250 per recip

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