Relevant property trusts—chargeable lifetime transfers
Relevant property trusts—chargeable lifetime transfers

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

  • Relevant property trusts—chargeable lifetime transfers
  • Principles of calculation
  • Method for calculating the tax on a lifetime transfer

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.

The lifetime charge to inheritance tax (IHT) applies when a person makes a 'transfer of value' or 'disposition' as a result of which the value of his estate is less after the disposition than it was beforehand. The definition covers actual gifts of property, as well as notional dispositions. Where tax is payable on lifetime transfers, it is at the rate of 20%.

This Practice Note explains how to calculate the amount of tax that arises under the lifetime charge. In general terms the lifetime charge