Relevant property trusts—the principal (ten-year) charge
Produced in partnership with Alexander Erskine and Charlotte Matthews of Taylor Wessing LLP
Relevant property trusts—the principal (ten-year) charge

The following Private Client guidance note Produced in partnership with Alexander Erskine and Charlotte Matthews of Taylor Wessing LLP provides comprehensive and up to date legal information covering:

  • Relevant property trusts—the principal (ten-year) charge
  • Is IHT an issue for a particular settlement?
  • Whose responsibility is it to file the account and/or pay the tax?
  • The principal charge
  • The amount of relevant property held in the settlement on the anniversary date
  • Are there any related settlements?
  • Have there been any same-day additions?
  • The amount of NRB to be deducted
  • Planning tips ahead of a principal charge

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.

This Practice Note is designed to be read alongside:

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For an introduction to the relevant property regime for trusts, see Practice Notes: Trusts—inheritance tax—overview and The meaning of relevant property.

The charge to inheritance tax (IHT) on relevant property arises on two occasions:

  1. the periodic ten-year anniversary of the settlement's creation (the principal (ten-year) charge), and

  2. when property (or value) ceases to be relevant property (see below) other than on excepted occasions (the exit charge)

There is further guidance