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A reversionary interest is not excluded property if it has at any time been acquired (whether by the person entitled to it or by a person previously entitled to it) for a consideration in money or money's worth¹. This is the case regardless of the amount of the consideration, and however long ago the acquisition took place.

The reason for this exclusion is that if a reversionary interest continued to be excluded property after being purchased it would be very convenient as a means of tax-free diminution of an estate. A person could purchase a reversionary interest and then give it away, and so diminish his estate by the amount of the consideration paid for the reversionary interest without any IHT transfer of value arising, provided that the consideration was a credible commercial price for the reversionary interest.

The legislation could have avoided this by providing for reversionary interests to be treated as being of no value for all purposes, but that would have meant that reversionary interests could not be sold commercially by the persons