Inheritance Tax Act 1984 section 48

Excluded property: reversionary interests and Treasury securities

Section 48 sets out the circumstances in which reversionary interests (future interests in settled property) and certain Treasury securities held in settlements are treated as excluded property and therefore fall outside the scope of inheritance tax, together with the exceptions where this treatment does not apply.

• A reversionary interest is generally excluded property and therefore outside the charge to inheritance tax, but this treatment is denied where the interest was purchased for money or money's worth, or where the settlor or their spouse or civil partner is or has been beneficially entitled to it, or where it is expectant on the end of a lease treated as a settlement, or where anti-avoidance provisions apply.
• Foreign property held in a settlement is excluded property provided the settlor was not domiciled in the UK when the settlement was made or when the property was added to it, but this protection is lost where a UK-domiciled individual acquired an interest in possession in the property as a result of a disposition for consideration made on or after 5 December 2005.
• Treasury securities held in a settlement that carry an exemption condition for non-UK domiciled persons are excluded property if a qualifying person holds an interest in possession in them, or if all known beneficiaries satisfy the relevant description — though this is now subject to the rules in Schedule A1 on non-excluded overseas property.
• Where settled property moves from one settlement to another, the excluded property test for Treasury securities in the second settlement must be satisfied by reference to the beneficiaries of both the first and the second settlement, unless a reversionary interest in the property was settled on the trusts of the second settlement before 10 December 1981.