Section 54 | Exceptions from charge on death

(1)Where a person is entitled to an interest in possession in settled property which on his death, but during the settlor’s life, reverts to the settlor, the value of the settled property shall be left out of account in determining for the purposes of this Act the value of the deceased’s estate immediately before his death.

(2)Where on the death of a person entitled to an interest in possession in settled property—^F1

(a)the settlor’s spouse or civil partner, or^F2

(b)if the settlor has died less than two years earlier, the settlor’s widow or widower or surviving civil partner,^F3

becomes beneficially entitled to the settled property and is a long-term UK resident, the value of the settled property shall be left out of account in determining for the purposes of this Act the value of the deceased’s estate immediately before his death.

(2A)Where a person becomes beneficially entitled on or after 22nd March 2006 to an interest in possession in settled property, subsections (1) and (2) above apply in relation to the interest only if it is—^F4

(a)a disabled person's interest, or^F4

(b)a transitional serial interest.^F4

(2B)Where—^F4

(a)a person (“B”) becomes beneficially entitled on or after 22nd March 2006 to an interest in possession in settled property,^F4

(b)B dies,^F4

(c)the interest in possession, throughout the period beginning with when B becomes beneficially entitled to it and ending with B's death, is an immediate post-death interest,^F4

(d)the settlor died before B's death but less than two years earlier, and^F4

(e)on B's death, the settlor's widow or widower, or surviving civil partner, becomes beneficially entitled to the settled property and is a long-term UK resident,^F4F5

the value of the settled property shall be left out of account in determining for the purposes of this Act the value of B's estate immediately before his death.

(2C)Where—^F6

(a)a person who is entitled to an interest in possession in settled property dies,^F6

(b)the settled property became comprised in the settlement before 30 October 2024,^F6

(c)immediately before 30 October 2024, the settled property was excluded property by virtue of section 48(3) or (3A) (as it had effect at that time),^F6

(d)the person became beneficially entitled to the interest before 30 October 2024, and^F6

(e)immediately before the person’s death, the settled property—^F6

(i)was situated outside the United Kingdom and was not property to which paragraph 2 or 3 of Schedule A1 applied (overseas property with value attributable to UK residential property or UK agricultural property), or^F6F7

(ii)was a holding in an authorised unit trust or a share in an open-ended investment company,^F6

the value of the settled property shall be left out of account in determining for the purposes of this Act the value of the person’s estate immediately before their death.

(2D)Where a person became beneficially entitled to an interest in possession in settled property on or after 22 March 2006, subsection (2C) applies in relation to the interest only if it is—^F6

(a)an immediate post-death interest,^F6

(b)a disabled person’s interest, or^F6

(c)a transitional serial interest,^F6

or falls within section 5(1B) (certain interests acquired with no gratuitous benefit).

(3)Subsections (5) and (6) of section 53 above shall apply in relation to subsections (1), (2) and (2B) above as they apply in relation to section 53(3) and (4) , but as if the reference in section 53(5)(a) above to section 53(4)(b) above were to subsection (2)(b) or (2B) above. .^F8F9

(4)For the purposes of this section, where it cannot be known which of two or more persons who have died survived the other or others they shall be assumed to have died at the same instant.