Section 5 | Meaning of estate.

(1)For the purposes of this Act a person’s estate is the aggregate of all the property to which he is beneficially entitled, except that—^F1

(a)the estate of a person—^F1

(i)does not include an interest in possession in settled property to which section 71A or 71D below applies, and^F1

(ii)does not include an interest in possession that falls within subsection (1A) below unless it falls within subsection (1B) below, and^F1F2

(b)the estate of a person immediately before his death does not include excluded property or a foreign-owned work of art which is situated in the United Kingdom for one or more of the purposes of public display, cleaning and restoration (and for no other purpose).^F1F3

(1A)An interest in possession falls within this subsection if—^F4

(a)it is an interest in possession in settled property,^F4

(b)the settled property is not property to which section 71A or 71D below applies,^F4

(c)the person is beneficially entitled to the interest in possession,^F4

(d)the person became beneficially entitled to the interest in possession on or after 22nd March 2006, and^F4

(e)the interest in possession is—^F4

(i)not an immediate post-death interest,^F4

(ii)not a disabled person's interest, and^F4

(iii)not a transitional serial interest.^F4

(1B)An interest in possession falls within this subsection if—^F5

(a)the person became beneficially entitled to it on or after 9 December 2009 by virtue of a disposition that was prevented from being a transfer of value by section 10 (no gratuitous benefit), and^F5

(b)the person—^F5

(i)has been a long-term UK resident at any time on or after 6 April 2025 while beneficially entitled to it, or^F5

(ii)became beneficially entitled to it at a time before 6 April 2025 while domiciled in the United Kingdom.^F5

(2)A person who has a general power which enables him, or would if he were sui juris enable him, to dispose of any property other than settled property, or to charge money on any property other than settled property, shall be treated as beneficially entitled to the property or money; and for this purpose “general power” means a power or authority enabling the person by whom it is exercisable to appoint or dispose of property as he thinks fit.

(3)In determining the value of a person’s estate at any time his liabilities at that time shall be taken into account, except as otherwise provided by this Act.

(4)The liabilities to be taken into account in determining the value of a transferor’s estate immediately after a transfer of value include his liability for inheritance tax on the value transferred but not his liability (if any) for any other tax or duty resulting from the transfer.^F6

(5)Except in the case of a liability imposed by law, a liability incurred by a transferor shall be taken into account only to the extent that it was incurred for a consideration in money or money’s worth.