Inheritance Tax Act 1984 section 237

Imposition of charge

Section 237 creates an automatic legal charge, known as an Inland Revenue charge, over property where inheritance tax (or interest on it) remains unpaid, and sets out which property is subject to or exempt from that charge.

• Where IHT on a chargeable transfer remains unpaid, an Inland Revenue charge automatically attaches to the property that gave rise to the tax liability, including any property that directly or indirectly represents that original property.
• Personal or movable property in the UK that was beneficially owned by the deceased and vests in the personal representatives is exempt from the charge, as is heritable property situated in Scotland — though replacement property may still be caught.
• Where a potentially exempt transfer becomes chargeable on the transferor's death, property sold to a genuine purchaser before death escapes the charge, but property gifted away or otherwise disposed of (and any replacement property) remains subject to it.
• The charge ranks behind any existing encumbrance that was allowed as a deduction in valuing the property for IHT purposes, and any disposal of charged property generally passes it on subject to the charge unless the purchaser protection rules in section 238 apply.