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In most cases a reversionary interest (IHTM16231) is treated as excluded property (IHTM04251) for Inheritance Tax. When you calculate the increase in your deceased鈥檚 estate on the earlier chargeable transfer (IHTM04027), you should ignore any such reversionary interest which your deceased became entitled to before, or on, the earlier chargeable transfer.

Example

Virat by his Will leaves assets to Ishant for life. After Ishant dies the assets pass to Ravi absolutely. During Ishant鈥檚 lifetime Ravi has a reversionary interest in the assets.

The reversion which Ravi acquires under Virat鈥檚 Will in fact increases his estate. But because of IHTA84/S141(6) the reversion does not increase Ravi鈥檚 estate for the purposes of quick succession relief (QSR) (IHTM22041).

So

• there can be no QSR on Ravi鈥檚 death for the tax charged on Virat鈥檚 death
• if Ravi dies after Ishant, you calculate the QSR for tax payable on Ishant鈥檚 death on the basis that the increase in Ravi鈥檚 estate on Ishant鈥檚 death was the value of the settled fund at Ishant鈥檚 death, less the tax payable on it.

(The increase is not limited to the difference between the value and the value of Ravi鈥檚 pre-existing reversion.)

IHTA84/S141(6) is necessary to achieve this result because the excluded property provisions in IHTA84/S3(2), IHTA84/S5(1) and IHTA84/S48(1) do not apply for the purposes of IHTA84/S141.