Personal Tax

Pre-owned intangible property

Produced by Tolley
  • 19 Oct 2021 22:41

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

  • Pre-owned intangible property
  • The conditions
  • The residence and domicile conditions
  • Conditions for the property to be pre-owned
  • Meaning of 'settlement'
  • Income treated as that of the settlor
  • The chargeable amount
  • Interest at the official rate
  • Valuation
  • Insurance policies
  • More...

Pre-owned intangible property

The charge to pre-owned assets tax (POAT) for intangible property differs significantly from that for land and chattels and arises in more limited circumstances.

Intangible property is widely defined as any property other than chattels or interests in land. It includes such things as stocks and shares, securities, insurance policies and bank and building society accounts.

The conditions

The residence and domicile conditions

In order for pre-owned asset tax (POAT) to apply to the individual for any tax year, he must be resident in the UK during that year, see the Residence ― overview guidance note.

Where the individual is UK resident but is domiciled outside the UK, the POAT applies only if the asset is situated in the UK. For this purpose, a person is domiciled in the UK at any time if he would be domiciled, or treated as domiciled, in the UK under IHT legislation. See the Domicile guidance note and IHTA 1984, s 267 for circumstances in which a person can be treated as domiciled in the UK.

If the individual has at any time been domiciled outside the UK, no regard is to be had to any property which is in a trust and situated outside the UK, so long as the settlor was not UK domiciled at the time he made the settlement.

See Simon's Taxes I3.740.

Conditions for the property to be pre-owned

A POAT charge can arise for a tax year in relation to intangible property only if all the following conditions are met in relation to an individual (the chargeable person):

  1. there must first be a settlement in place (see below)

  2. the individual must be the settlor

  3. the settlement must contain intangible property settled (or added to the settlement) by the settlor after 17 March 1986 (or intangible property which represents any property settled or added by the settlor after that date)

  4. income from that settled property must fall to be treated for income tax purposes as income

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