Inheritance Tax Act 1984 section 5

Meaning of estate

Section 5 defines what constitutes a person's estate for inheritance tax purposes, including what property is included, what is excluded, and how liabilities are taken into account when valuing the estate.

• A person's estate is the total of all property to which they are beneficially entitled, but excluding certain interests in possession in settled property, excluded property, and foreign-owned works of art in the UK solely for public display, cleaning or restoration.
• Most interests in possession in settled property acquired on or after 22 March 2006 are not part of a person's estate, unless they qualify as an immediate post-death interest, a disabled person's interest, or a transitional serial interest — or were acquired through a non-gratuitous disposition meeting specific residency or domicile conditions.
• A person who holds a general power to dispose of or charge money on non-settled property is treated as beneficially entitled to that property, meaning it forms part of their estate.
• Liabilities reduce the value of the estate, but only inheritance tax on the value transferred is deductible immediately after a transfer of value — not other taxes arising from the transfer — and voluntary liabilities count only if incurred for money or money's worth.