IHTM04291 - Government securities in foreign ownership: introduction
鈥楪overnment securities鈥� is a term we use to describe securities issued by the Treasury.鈥疶hese are also known as 鈥�驳颈濒迟蝉鈥�.听听The Treasury can issue, and has issued, securities which听are exempt from UK taxation so long as they are in the beneficial ownership of persons who satisfy the conditions attached (usually that the person is not resident听or ordinarily resident听in the UK).鈥疭ecurities issued with this condition are known as FOTRA (Free of Tax to Residents Abroad) gilts.听
Gilts are excluded property for inheritance tax purposes if they are in the beneficial ownership of a person who satisfies the conditions on which the gilt is issued听by the Treasury.听 Where the security is settled property, the听beneficiary or beneficiaries concerned听must satisfy the conditions.听听听
For chargeable events on or after 6 April 2025, all FOTRA securities, whenever issued, are treated as though no domicile condition were included in the requirements.听听
The precise terms of the conditions are set out in听the prospectus under which the gilts were issued. 听In general: 听
gilts issued with conditions after April 2013 require the beneficial owner to be non-resident (IHTM13025)听听
gilts issued with conditions between April 1998 and April 2013 require the beneficial owner to be ordinarily resident (IHTM13025) outside the UK听
gilts issued before April 1996听require the beneficial owner to be domiciled (IHTM13000) and ordinarily resident outside the UK, so if the chargeable event is before 6 April 2025 that domicile condition will remain relevant.听
On 6听April 1998, gilts which were issued听before that date听without听conditions were converted to be FOTRA securities with a condition that the beneficial owner is ordinarily resident outside the UK.听 They will be therefore be听excluded property for chargeable events on or after 6听April 1998, but not if the chargeable event was before this.听听听
However听3陆% War Loan Stock听issued in 1952 or later was not so converted and听听the听beneficial owner had to be both ordinarily resident and domiciled outside the UK, and the additional听domicile condition continued to apply to deaths or other chargeable events. 听This stock was fully听redeemed听on听9 March 2015.