Section 48ZA — Inheritance Tax Act 1984: Excluded property: property situated outside the UK etc

Excluded property: property situated outside the UK etc 48ZA 1 If property comprised in a settlement—

a is situated outside the United Kingdom, or b is a holding in an authorised unit trust or a share in an open-ended investment company, this section applies to the property and section 6(1) and (1A) (general excluded property rule) does not.

2 If the settlor is alive, the property is excluded property at any time when the settlor is not a long-term UK resident.

3 If the settlor died on or after 6 April 2025, the property is excluded property if the settlor was not a long-term UK resident immediately before they died.

4 If the settlor died before 6 April 2025, the property is excluded property if the settlor was not domiciled in the United Kingdom when the property became comprised in the settlement.

5 Subsections (2) and (3) do not apply at any time to property to which section 49(1) (certain interests in possession) applies if, at that time, the person beneficially entitled to the interest is a long-term UK resident.

6 Subsections (2) to (4) do not apply to property if—

a an individual has been beneficially entitled to an interest in possession in the property—

i at any time on or after 6 April 2025 while a long-term UK resident, or ii at any time before that date while domiciled in the United Kingdom, and b the entitlement arose directly or indirectly as a result of a disposition made on or after 5 December 2005 for a consideration in money or money's worth.

7 For the purposes of subsection (6)—

a it is immaterial whether the consideration was given by the individual or by anyone else, and b the cases in which an entitlement arose indirectly as a result of a disposition include any case where the entitlement arose under a will or the law relating to intestacy.

8 Where the conditions in paragraphs (a) to (d) of section 74A(1) (arrangements involving acquisition of interest in settled property etc) are satisfied, none of subsections (2) to (4) applies at the time when the conditions are first satisfied or at any later time to make the relevant settled property (within the meaning of section 74A) excluded property.

9 If—

a an amount is payable in respect of property (“the existing property”) comprised in a settlement, and b the amount represents an accumulation of income which (once accumulated) becomes comprised in the settlement, subsection (4) has effect in the case of the amount as if the reference to the time when it became comprised in the settlement were to the time when the existing property became comprised in the settlement.

10 Subsections (2) to (4) are subject to Schedule A1 (overseas property with value attributable to UK residential property or UK agricultural property ).

11 The reference in subsection (1) to property comprised in a settlement does not include a reversionary interest in the property (and accordingly this section does not apply to such an interest and section 6(1) does).