Syllabus A3. Inheritance Tax A3b. The scope of IHT

A3bii/iii. Excluded Property

Syllabus A3bii/iii)

Identify excluded property
Identify and advise on the tax implications of the location of assets

UK vs non-UK domiciled individuals

  1. When a person is UK domiciled they must pay IHT on UK and overseas located assets

  2. A non-UK domiciled individual is only liable to IHT on his UK assets.

    Therefore, property that will be excluded from the IHT computation is:

    Property situated overseas where the owner is not UK domiciled.

    This is because, someone who is UK domiciled will pay IHT on their worldwide assets, but someone who is not UK domiciled will pay IHT on their UK located assets.

Therefore, it is necessary to be able to identify where in the world an asset is deemed to be located for IHT purposes, to see whether a non-UK domiciled person needs to pay UK IHT.

Description of asset Location
Land and buildings, freehold or leasehold Physical location
Chattels (Movable, tangible possessions) Physical location at time of transfer
Receivables Where debtor resides
Bank accounts Location of branch which maintains the account
Business or an interest in a business Place where business is carried on
Registered shares and securities Place where shares are registered
Government securities Place of registration
Life assurance policies Place were proceeds are payable


Sam has lived in the UK for the last 6 years, however he is not UK domiciled. 

He owns the following property:

  1. Freehold property situated in the UK

  2. Leasehold property situated in the USA

  3. Shares in USA Inc., a company quoted and registered on the US stock exchange. 

    Will Sam be liable to IHT if he makes transfers all of his property?


He will be chargeable to IHT on UK located assets.

  • The freehold property is situated in the UK and so is a chargeable asset for IHT.

  • The leasehold property is situated in the USA, and therefore is not a chargeable asset for IHT.

  • The shares is USA Inc. are registered in the USA and are therefore not a chargeable asset for IHT.