Heritage property ― loss of conditional exemption

Produced by Tolley in association with

Trusts and Inheritance Tax

Guidance

Introduction

Where a chargeable event occurs in relation to conditionally exempted property, the exemption may be lost and an inheritance tax charge may arise. For information on the conditional exemption, see the Heritage property ― conditional exemption guidance note and Simon’s Taxes I7.501 onwards.

Chargeable events

Chargeable events may consist of:

•
a material breach of an undertaking
•
a disposal of the heritage property
•
the death of the person beneficially entitled to the property

Where a breach of an undertaking has occurred, in practice HMRC will usually give the taxpayer an opportunity to remedy the breach where possible. If there has been lengthy period of no public access, this may not be possible. Note that a failure to observe an undertaking, as varied by a proposal by HMRC and directed to take effect by the Tribunal, also amounts to a material breach of an undertaking.

The meaning of ‘disposal’ is usually quite straightforward. Note that HMRC states mortgages and leases are not

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