Opting out of the pre-owned asset tax charge

Produced by a Tolley Personal Tax expert

Personal Tax

Guidance

This guidance note considers the circumstances in which an individual may wish to opt out of the pre-owned asset tax (POAT) and the how this impacts their inheritance tax position.

For discussion of the regime generally, see the Pre-owned asset tax overview guidance note.

An individual subject to pre-owned asset tax (POAT) can make an irrevocable election to opt out of the pre-owned asset tax regime in relation to a particular asset. The downside is that the asset will then form part of the estate for IHT purposes. Separate elections can be made for different assets.

Effect of election ― land and chattels

If it is to be made at all, the election must be made for the first tax year in which an individual would otherwise be chargeable to pre-owned asset tax by reference to the enjoyment of the asset in question, ie the occupation of the land or possession or use of the chattel, or any other property for which it has been substituted.

The effect of the election is

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