Section 8H — Inheritance Tax Act 1984: Meaning of “qualifying residential interest” , “qualifying former residential interest” and “residential property interest”

Meaning of “qualifying residential interest” , “qualifying former residential interest” and “residential property interest” 8H 1 This section applies for the purposes of sections 8E to 8FE and section 8M .

2 A “ residential property interest ”, in relation to a person, means an interest in a dwelling-house which has been the person's residence at a time when the person's estate included that, or any other, interest in the dwelling-house.

3 Where a person's estate immediately before the person's death includes residential property interests in just one dwelling-house, the person's interests in that dwelling-house are a qualifying residential interest in relation to the person.

4 Where—

a a person's estate immediately before the person's death includes residential property interests in each of two or more dwelling-houses, and b the person's personal representatives nominate one (and only one) of those dwelling-houses, the person's interests in the nominated dwelling-house are a qualifying residential interest in relation to the person. 4A Subsection (4B) or (4C) applies where—

a a person disposes of a residential property interest in a dwelling-house on or after 8 July 2015 (and before the person dies),

and b the person's personal representatives nominate—

i where there is only one such dwelling-house, that dwelling-house, or ii where there are two or more such dwelling-houses, one (and only one) of those dwelling-houses. 4B Where—

a the person—

i disposes of a residential property interest in the nominated dwelling-house at a post-occupation time, or ii disposes of two or more residential property interests in the nominated dwelling-house at the same post-occupation time or at post-occupation times on the same day, and b the person does not otherwise dispose of residential property interests in the nominated dwelling-house at post-occupation times, the interest disposed of is, or the interests disposed of are, a qualifying former residential interest in relation to the person. 4C Where—

a the person disposes of residential property interests in the nominated dwelling-house at post-occupation times on two or more days, and b the person's personal representatives nominate one (and only one) of those days, the interest or interests disposed of at post-occupation times on the nominated day is or are a qualifying former residential interest in relation to the person. 4D For the purposes of subsections (4A) to (4C)—

a a person is to be treated as not disposing of a residential property interest in a dwelling-house where the person disposes of an interest in the dwelling-house by way of gift and the interest is, in relation to the gift and the donor, property subject to a reservation within the meaning of section 102 of the Finance Act 1986 (gifts with reservation),

and b a person is to be treated as disposing of a residential property interest in a dwelling-house if the person is treated as making a potentially exempt transfer of the interest as a result of the operation of section 102(4) of that Act (property ceasing to be subject to a reservation). 4E Where—

a a transfer of value by a person is a conditionally exempt transfer of a residential property interest, and b at the time of the person's death, no chargeable event has occurred with respect to that interest, that interest may not be, or be included in, a qualifying former residential interest in relation to the person. 4F In subsections (4B) and (4C) “ post-occupation time ” means a time—

a on or after 8 July 2015, b after the nominated dwelling-house first became the person's residence, and c before the person dies. 4G For the purposes of subsections (4A) to (4C), if the disposal is under a contract which is completed by a conveyance, the disposal occurs at the time when the interest is conveyed.

5 A reference in this section to a dwelling-house—

a includes any land occupied and enjoyed with it as its garden or grounds, but b does not include, in the case of any particular person, any trees or underwood in relation to which an election is made under section 125 as it applies in relation to that person's death.

6 If at any time when a person's estate includes an interest in a dwelling-house, the person—

a resides in living accommodation which for the person is job-related, and b intends in due course to occupy the dwelling-house as the person's residence, this section applies as if the dwelling-house were at that time occupied by the person as a residence.

7 Section 222(8A) to (8D) of the 1992 Act (meaning of “job-related”), but not section 222(9) of that Act, apply for the purposes of subsection (6).