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In general, subject to the exceptions set out in I5.724–I5.728, a reversionary interest is excluded property¹. Thus:

1. Ìý

   (a)ÌýÌýÌýÌý For the purposes of determining whether a lifetime disposition causes a diminution in the value of the transferor's estate, and therefore whether he has made a transfer of value², no account is taken of the value of a reversionary interest which is excluded property and ceases to form part of the transferor's estate as a result of the disposition³

2. Ìý

   (b)ÌýÌýÌýÌý If a person dies beneficially entitled to such a reversionary interest it does not form part of his estate (for IHT purposes only) immediately before his death⁴ and so is not subject to the IHT charge arising as a result of his death⁵. However, a reversionary interest which is excluded property can still be the subject-matter of an instrument varying the deceased's dispositions within two years of his death and falling within IHTA 1984, s