"Excluded property" is a technical term. As its name implies,
it covers property of certain types which is effectively outside
the charge to IHT, subject to certain conditions. The exclusion
applies to property transferred in lifetime (IHTA84/S3 (2) or owned
at death by individuals (IHTA84/S5 (1)) and to property held in a
settlement (IHTA84/S53 (1) and IHTA84/S58 (1)(f)) The concept of
“excluded property” is different from that of
“exempt transfer”. Only the latter can be relevant for
the purposes of IHTA84/S36 - (42)(grossing up, interaction etc). (
IHTM11000)
Remember that you must establish the relevant facts by
reference to the time when the transfer or disposition - which
would otherwise be within the scope of IHT - was made, unless the
legislation points you to any different time.
Example
On 6 April 1990, A transferred US $50,000 to his daughter,
and he died in 1992 domiciled in the UK.
In determining whether the lifetime transfer was of excluded
property, you should establish the locality of the cash transferred
and A’s domicile as at 6 April 1990. Any subsequent dealing
with the cash (e.g. its investment in the UK) or change in
A’s domicile does not normally matter.
