IHTM47025 - Long-term UK residence: Companies

At IHTA84/S6C, there is a long-term UK resident test for corporate bodies, such as limited companies.听听听

This will be relevant, for example, in establishing听whether settled property in a settlement made by a corporate body is excluded property (IHTM42953).听听

It is not relevant to the main excluded property tests in section 6(1) and 6(1A) which only apply to individuals.听听

Nor is a close 肠辞尘辫补苍测鈥檚 residence status relevant to the charge under IHTA/S94 (IHTM14851). Whether the property is excluded depends on the location of the property and the long-term UK residence status of the participators.听

A body corporate will be long-term UK resident at all times听in a tax year if it was:听

  • Incorporated in the UK; or听

  • Within the charge to Corporation Tax听by virtue of CTA09/S5(1) at any time during the previous听tax year as a UK resident company听(see INTM120030).听

For the first year of the body鈥檚 existence, only the incorporation status is relevant as there will be no previous听tax year to consider.听

Where a company ceases to exist, it is treated as a deceased settlor for the purposes of the excluded property rules (IHTM04273)听so if the company ceases to exist on or after 6 April 2025 you will be looking to test the 肠辞尘辫补苍测鈥檚 long-term UK residence status at that听time:听foreign property settled by the company will only be excluded property if the company was not long-term UK resident at the time it ceased to exist.听听

Where a company settlor听ceased to exist before 6 April 2025, foreign property settled by the company will only be excluded property if the company was not domiciled in the UK at the time听it became comprised听in the settlement.听

Identifying听the entity听听

Where the company is a multi-national with a presence in the UK, you will need to establish听which entity is the settlor.听听

If the payment was from an entity based in the UK, you will need to establish听whether the UK entity is a separate branch of the company or a 鈥榩ermanent establishment鈥� in the UK. A separate branch is likely to be registered in the UK so any contributions will be made by a long-term UK resident body corporate (on or after 6 April 2025).听听

However, a UK permanent establishment is not a separate legal person, but is part of the overseas company, so any contributions by a UK permanent establishment will be made by a body corporate which is not long-term UK resident.