Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Excluded property definition

What does Excluded property mean? Assets treated as outside the UK Inheritance Tax (IHT) charge. Statutorily defined in the Inheritance Tax Act 1984, s 6 (with settlement rules in s 48), it principally covers non‑UK situs assets of individuals who are not domiciled (and not deemed domiciled) in the UK, and non‑UK assets in settlements made by such individuals. In practice, this underpins “excluded property trusts”, keeping offshore trust assets outside the relevant property regime’s ten‑year and exit charges. Key limits: interests connected with UK residential property, and related loans or collateral, are not excluded even if held through offshore companies or partnerships (see IHTA 1984,...

UK IHT on indirectly held UK residential property by long-term UK residents: Schedule A1, close companies, partnerships, relevant loans, two-year rule, de-enveloping and planning

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Practice notes

STOP PRESS:

At the 2025 Budget, the government confirmed plans to legislate against IHT avoidance that exploits the situs of personal assets and trust property. A key proposal expands Rules on indirect holdings of UK residential property to capture UK agricultural property. For further detail, see: Budget 2025—Private Client analysis — International and Policy Paper: Inheritance tax: anti-avoidance measures for non-long-term UK residents and trusts. This Practice Note outlines amendments to the Excluded property rules from 6 April 2017 introduced by the Finance (No 2) Act 2017 (F(No 2)A 2017). As a result, UK inheritance tax (IHT) is charged on UK residential property owned by (or on behalf of) a long-term UK resident (LTR), whether held directly or via intermediate structures, unless the interest is through a diversely held vehicle. Before 6 April 2025, when domicile stopped being a relevant consideration for IHT, these provisions applied to individuals who were not domiciled, or were deemed domiciled, in the UK. For guidance on how domicile affected IHT, see Practice Note: Introductory guide to residence and domicile for UK tax purposes before 6 April 2025 [ARCHIVED]. Holding UK property through a company may also necessitate compliance with additional compliance requirements as appropriate...

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Web page updated on 22/05/2026

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