The Inheritance Tax (Delivery of Accounts) (Excepted Estates) Regulations 2002

Explanatory Note

(This note is not part of the Regulations)

These Regulations replace the Capital Transfer Tax (Delivery of Accounts) Regulations 1981 (S.I. 1981/880), the Capital Transfer Tax (Delivery of Accounts) (Scotland) Regulations 1981 (S.I. 1981/881) and the Capital Transfer Tax (Delivery of Accounts) (Northern Ireland) Regulations 1981 (S.I. 1981/1441) (“the 1981 Regulations”) in relation to the estates of persons who died on or after 6th April 2002. The 1981 Regulations and these Regulations provide that a person is not required to deliver an account of the property comprised in an excepted estate for inheritance tax purposes. An excepted estate is defined in regulation 3 of these Regulations.

The definition of excepted estates differs from the definition in the 1981 Regulations in six respects.

Firstly, the limit on the aggregate of the gross value of the deceased’s estate and of the value transferred by any “specified transfers” (as defined) made by the deceased is raised from £210,000 to £220,000.

Secondly, up to £100,000 of this value may be attributable to settled property in which the deceased was entitled to an interest in possession.

Thirdly, the limit on the value of property situated outside the United Kingdom which may form part of the deceased’s estate is raised from £50,000 to £75,000.

Fourthly, the limit on the aggregate value of chargeable transfers that are specified transfers made during the period of seven years ending with the deceased’s death is raised from £75,000 to £100,000.

Fifthly, the definition of “specified transfers” is extended to include a transfer of an interest in land and furnishings and chattels disposed of at the same time to the same person which is intended to be enjoyed with the land save to the extent that the property transferred is property subject to a reservation to which section 102 of the Finance Act 1986 applies or becomes settled property.

Sixthly, a new category of excepted estates is introduced for persons who have never been domiciled or treated as domiciled in the United Kingdom. The value of such a person’s estate situated in the United Kingdom must be attributable to cash or quoted shares or securities which do not exceed a gross value of £100,000.

Regulation 4 (Accounts) and regulation 6 (Discharge of persons and property from tax) differ from the equivalent regulations in the Capital Transfer Tax (Delivery of Accounts) (Scotland) Regulations 1981 (regulations 4 and 6 respectively) to reflect the fact that in Scotland the Inland Revenue Account and the inventory are now separate documents.