Section 5 Meaning of estate.

United Kingdom

(1)

For the purposes of this Act a person’s estate is the aggregate of all the property to which he is beneficially entitled, F1 except that—

(a)

the estate of a person—

(i)

does not include an interest in possession in settled property to which section 71A or 71D below applies, and

(ii)

does not include an interest in possession that falls within subsection (1A) below F2unless it falls within subsection (1B) below, and

(b)

the estate of a person immediately before his death does not include excluded property F3or a foreign-owned work of art which is situated in the United Kingdom for one or more of the purposes of public display, cleaning and restoration (and for no other purpose).

F4(1A)

An interest in possession falls within this subsection if—

(a)

it is an interest in possession in settled property,

(b)

the settled property is not property to which section 71A or 71D below applies,

(c)

the person is beneficially entitled to the interest in possession,

(d)

the person became beneficially entitled to the interest in possession on or after 22nd March 2006, and

(e)

the interest in possession is—

(i)

not an immediate post-death interest,

(ii)

not a disabled person's interest, and

(iii)

not a transitional serial interest.

F5(1B)

An interest in possession falls within this subsection if—

(a)

the person became beneficially entitled to it on or after 9 December 2009 by virtue of a disposition that was prevented from being a transfer of value by section 10 (no gratuitous benefit), and

(b)

the person—

(i)

has been a long-term UK resident at any time on or after 6 April 2025 while beneficially entitled to it, or

(ii)

became beneficially entitled to it at a time before 6 April 2025 while domiciled in the United Kingdom.

(2)

A person who has a general power which enables him, or would if he were sui juris enable him, to dispose of any property other than settled property, or to charge money on any property other than settled property, shall be treated as beneficially entitled to the property or money; and for this purpose “general power” means a power or authority enabling the person by whom it is exercisable to appoint or dispose of property as he thinks fit.

(3)

In determining the value of a person’s estate at any time his liabilities at that time shall be taken into account, except as otherwise provided by this Act.

(4)

The liabilities to be taken into account in determining the value of a transferor’s estate immediately after a transfer of value include his liability for F6inheritance tax on the value transferred but not his liability (if any) for any other tax or duty resulting from the transfer.

(5)

Except in the case of a liability imposed by law, a liability incurred by a transferor shall be taken into account only to the extent that it was incurred for a consideration in money or money’s worth.

Annotations

Textual amendments

F1: Words in s. 5(1) substituted (22.3.2006) by Finance Act 2006 (c. 25), s. 156, Sch. 20 para. 7, 10(2)
F2: Words in s. 5(a)(ii) inserted (with effect as mentioned in s. 53(10) of the amending Act) by Finance Act 2010 (c. 13), s. 53(3)(a)
F3: Words in s. 5(1)(b) inserted (6.4.2009 with effect as mentioned in art. 13(5) of the amending S.I.) by The Enactment of Extra-Statutory Concessions Order 2009 (S.I. 2009/730), art. 13(2)
F4: S. 5(1A) inserted (22.3.2006) by Finance Act 2006 (c. 25), s. 156, Sch. 20 paras. 7, 10(3)
F5: S. 5(1B) substituted (6.4.2025) by Finance Act 2025 (c. 8), Sch. 13 paras. 2, 45(1)
F6: See Finance Act 1986 s. 100(1)and (2)—for any liability to tax arising on and after 25July 1986any reference in the legislation to capital transfer tax has effect as a reference to inheritance tax.

Notes on the whole Act

Textual amendments

F1: By Finance Act 1986 s. 100(1), on and after 25 July 1986 the Capital Transfer Tax Act 1984 may be cited as the Inheritance Tax Act 1984.