In March this year, a new form of income tax, the preowned asset tax (POAT), was introduced via the Finance Bill. The new income tax charge will have huge consequences for inheritance tax (IHT) planning, reaching further than just obvious ‘tax avoidance schemes’. Since the Gifts with Reservation of Benefit (GWR) rules were introduced in 1986, ways have been sought to make lifetime gifts of assets without being caught by those rules. After the cases of Ingram v IRC [1997] and IRC v Eversden [2002] were overturned by a ‘one-off’ piece of legislation, this is a full-blown attack on ‘tax avoidance’.
The draft POAT legislation is set out in Schedule 15 and 84 of the Finance Bill. There are three primary charging provisions: paragraph three, regarding land; paragraph six, regarding chattels (an item of personal property, other than money); and paragraph eight, regarding intangible property (any property held in a settlement, other than chattels or interests in land).
