Pre-owned asset tax overview

Produced by a Tolley Personal Tax expert

Personal Tax

Guidance

This guidance note outlines the circumstances in which the pre-owned asset tax (POAT) applies, with links to detailed guidance on exemptions, exceptions and scope.

The pre-owned asset tax is an income tax charge anti-avoidance measure. It is designed to address gaps in the inheritance tax rules where individuals give away wealth, but continue to benefit from it.

Retaining the benefit of gifted assets

Where an individual gives away an asset and continues to benefit from it (or may benefit from it), it is likely that for Inheritance tax it will be treated as a gift with reservation (see the Gifts with reservation ― overview guidance note).

Where gifts with reservation applies, the asset remains in the individual’s estate at death.

If, instead, an individual enjoys the benefits of an asset which has been purchased by a third party (for example a relative), with cash which they gave to that third party, then gifts with reservation rules may be avoided.

Some inheritance planning schemes also aim to avoid the gifts with reservation rules for assets through complex

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