Personal Tax

Pre-owned asset tax ― excluded transactions and exemptions

Produced by Tolley
  • 19 Oct 2021 22:38

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 thetransaction whereby thechargeable person disposed of his interest in theasset was an ‘excluded transaction’, or

  2. the contribution condition would otherwise be met but for thefact that thechargeable person provided theconsideration given by another person for theacquisition of theasset by means of an ‘excluded transaction’


See thePre-owned land and Pre-owned chattels guidance notes for full details of thedisposal and contribution conditions. Excluded transactions for each of thetwo conditions are as listed below. Excluded transactions are of no relevance to thecharge to POAT in respect of intangible property.

The disposal condition

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

  1. a)

    a disposal of theindividual’s whole interest in theproperty 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 theproperty to theindividual's spouse / civil partner (or, where thetransfer has been ordered by a court, to his former spouse / civil partner)

  3. c)

    a disposal by way of gift (or, where thetransfer is for thebenefit of his former spouse / civil partner, in accordance with a court order) by virtue of which theproperty became settled property in which theindividual’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 theIHT annual exemption (£3,000 per tax year) or thesmall gifts exemption (up to £250 per recipient per tax year)


As regards (b) above, there is no requirement

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