Accumulation and maintenance trusts—IHT
Accumulation and maintenance trusts—IHT

The following Private Client guidance note provides comprehensive and up to date legal information covering:

  • Accumulation and maintenance trusts—IHT
  • IHT privileges of A&M trusts
  • The requirements for an A&M trust
  • A&M trusts—the FA 2006 changes and transitional arrangements
  • Options available to the trustees after Finance Act 2006

FORTHCOMING CHANGE: As originally announced at Autumn Budget 2017 and followed up by written statement after Spring Statement 2018, plus an announcement in Budget 2018, the government ran a consultation on the taxation of trusts from 7 November 2018 to 28 February 2019, inviting views on the principles of transparency, fairness and simplicity that it believes should underpin the taxation of trusts. In response, in July 2019, the Office of Tax Simplification issued its second report on inheritance tax. See also the report published by the All-Party Parliamentary Group for Inheritance & Intergenerational Fairness in January 2020 recommending the adoption of a new inheritance tax regime. See also the research exploring the use of trusts which was also published on 7 November 2018. See News Analysis: Exploring the consultation and review on the taxation of trusts.

An accumulation and maintenance (A&M) settlement is a particular type of non-interest in possession (IIP) settlement, intended to make provision for children and young adults up to the age of 25. A&M settlements enjoyed privileged inheritance tax (IHT) treatment between 1975 and 2006. This privileged treatment was stopped as part of the widespread changes to the taxation of trusts introduced by Finance Act 2006 (FA 2006) (see Practice Note: Finance Act 2006 changes to trust taxation). At the same time, transitional provisions were introduced for