Relevant property trusts—principal (ten-year) charge pro forma calculation
Relevant property trusts—principal (ten-year) charge pro forma calculation

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

  • Relevant property trusts—principal (ten-year) charge pro forma calculation
  • Principal charge pro forma

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.

For detailed guidance on calculating the principal charge, see Practice Note: Relevant property trusts—the principal (ten-year) charge.

Trustees of a relevant property trust are charged to inheritance tax (IHT) on each ten-year anniversary after the trust was created. This charge is known as any of the following:

  1. the principal charge

  2. the periodic charge

  3. the ten-year charge

  4. the decennial charge

To establish whether IHT is an issue for a particular settlement, see Practice Note: Is IHT an issue for a par