Inheritance Tax Act 1984 section 8K

Meaning of "closely inherited"

Section 8K defines when an asset or interest is "closely inherited" for the purposes of the residence nil-rate band, by setting out which recipients qualify as direct descendants of the deceased and by adopting a broad definition of family relationships.

• An asset is "closely inherited" if it passes to a lineal descendant of the deceased, the spouse or civil partner of a lineal descendant, or the widow/widower/surviving civil partner of a lineal descendant who predeceased the deceased — provided that surviving spouse or civil partner has not remarried or formed a new civil partnership before the deceased's death.
• Step-children, adopted children, fostered children, and children for whom a guardian or special guardian was appointed before the age of 18 are all treated as children of the relevant parent figure for these purposes, and this treatment is permanent once the relationship exists.
• An adopted person retains their status as a child of their natural parent as well as being treated as a child of the adoptive parent, so both relationships count.
• Where any person is treated as a child of another under these extended rules, that person's own lineal descendants are also treated as lineal descendants of the parent figure — ensuring the benefits flow through all subsequent generations.