Pre-owned land

Produced by Tolley
Pre-owned land

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

  • Pre-owned land
  • The conditions
  • The residence and domicile conditions
  • The contribution and disposal conditions
  • Occupation of land
  • The chargeable amount
  • The appropriate rental value of land
  • The rental value of land
  • Non-exempt sales
  • Valuations
  • More...

The type of asset most commonly encountered when dealing with the charge to tax on pre-owned assets (the POAT charge) is land. Land includes buildings, and the asset may well be a domestic residence, eg the family home.

The conditions

The residence and domicile conditions

In order for the POAT to apply to the individual for any tax year, he must be resident in the UK during that year, see the Residence 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.

The contribution and disposal conditions

A POAT charge arises in relation to land where an individual (the chargeable person):

  1. occupies land (see below), whether alone or together with others, and

  2. either the disposal condition or the contribution condition is met

FA 2004, Sch 15, para 3(1)

The disposal condition is met where:

  1. at any time after 17 March 1986, the chargeable person had owned

    1. an interest in the land, or

    2. an interest in another asset which was sold and the proceeds used (directly or indirectly) to acquire an interest in the land, and

  2. the chargeable person disposed of all or part of that interest other than by an excluded transaction (see the Pre-owned asset tax ― excluded transactions and exemptions guidance note)

FA 2004, Sch 15 para 3(2); IHTM44004

A disposition which

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