IHTM04271 - Foreign settled property: introduction

Property (IHTM04030) situated abroad and comprised听in a settlement (IHTM16042) is excluded property (IHTM04251) at times when听the听settlor is not a long-term UK resident (IHTM47000)听

Where a settlor dies on or after 6 April 2025,听property situated abroad and comprised听in the settlement is excluded property if the settlor was听not a long-term UK resident听immediately听before their death.听听听

Where a settlor dies before 6 April 2025, property situated abroad and comprised听in a听settlement is excluded property if the settlor was domiciled听(IHTM13000) outside听the UK听at the time the听property听became comprised听in it, IHTA84/S48 (3). 听

In the case of property settled by Will, or under the rules of intestacy, it will be the date of the testator鈥檚 or intestate鈥檚 death that is relevant.听

The excluded property status of property which becomes comprised听in a听settlement after the settlor鈥檚 death will depend upon the long-term UK residence status of the person who contributed the assets to the settlement. That person听is the听settlor and听will be treated as having made a separate settlement (IHTM42253).听

These tests听do听not apply to a reversionary interest (IHTM04281) in that settled property, IHTA84/S48ZA(11).听

Your investigation should follow the principles in IHTM鈥疌hapter 9 (IHTM09000) bearing in mind the special factors鈥痑pplicable to excluded property.听

There are additional听requirements for鈥痳elevant property鈥痶rusts (IHTM42161)鈥痶hat fall within certain anti-avoidance provisions, IHTA84/S80 to IHTA84/S82. You will therefore need to determine听whether a settlement is a qualifying鈥痠nterest in possession (IIP) (IHTM16062) trust or鈥痳elevant property鈥痶rust for Inheritance Tax purposes and, if so, whether the additional听requirements apply and (where appropriate)听are satisfied. You should refer to Technical any case where these provisions appear to be听in point.听

Where foreign settled property is excluded property:

  • you should not seek to tax that property on the termination or coming to an end听(IHTM04084) of a qualifying鈥疘IP in the property, IHTA84/S53 (1)听

  • if the trusts applying to the property are鈥痭ot a qualifying IIP,鈥痶hen in determining听the rate of any鈥痳elevant property鈥痶rust charge, you should disregard that property for the period(s) when it was excluded property.