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 will only apply to individuals who transfer property into a trust that is subject to the relevant property regime. Outright gifts to individuals and transfers into a disabled person's trust will qualify as potentially exempt transfers (PET) and will not incur a lifetime charge. See Practice Note: Potentially Exempt Transfers (PETs). The calculation of tax that arises under the additional charge and the estate charge is considered separately in Practice Note: Calculating the IHT charge on death, although the principles which apply in all these cases are broadly the

For detailed guidance on calculating the exit charge both before and after the ten-year anniversary of a relevant property trust, see Practice Note: Relevant property trusts—the exit charge. When trust property ceases to be relevant property, it becomes subject to a charge to inheritance tax (IHT). This charge is known as either: • the exit charge, or • the proportionate charge To establish whether there has been an ‘exit’ subject to an IHT charge, see: The exit charge—what constitutes an 'exit' subject to

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: • the principal charge • the periodic charge • the ten-year charge • the decennial charge To establish whether IHT is an issue for a particular settlement, see Practice Note: Is IHT an issue for a particular settlement? Principal charge pro forma The following pro forma outlines a suggested calculation: £ £ The value

This Practice Note has been written to be read alongside the following flowchart: 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: • the periodic ten-year anniversary of the settlement's creation (the principal (ten-year) charge), and • when property (or value) ceases to be relevant property other than on excepted occasions (the exit charge) For further guidance on the exit charge as it applied prior to 18 November 2015, see Practice Note: Relevant property trusts—the exit charge before 18 November 2015. This Practice Note covers the calculation of the exit charge on relevant property on or after 18 November 2015 in further detail. The principal focus of this Practice Note is on inter vivos trusts. The exit charge—what constitutes an 'exit' subject to charge? Before considering the means of calculating exit charges, it is necessary to consider whether the event actually constitutes an 'exit'

ARCHIVED: This Practice Note has been archived and is no longer maintained. When trust property ceases to be relevant property, it becomes subject to a charge to inheritance tax (IHT). This charge is known as either: • the exit charge, or • the proportionate charge This Practice Note illustrates the method of calculating an exit charge when the occasion of charge, ie the date of the beneficiary's entitlement, was before 18 November 2015. Changes to the elements of the calculation were introduced by section 11 of Finance (No 2) Act 2015 (F(No 2)A 2015). General commentary on the calculation of the exit charge is provided in Practice Note: Relevant property trusts—the exit charge, which also illustrates the most recent amendments. This Practice Note provides: • a summary of the changes • a description of the old style calculation Summary of the changes introduced by F(No 2)A 2015 HMRC undertook a series of consultations in the period 2012 to 2015 with the expressed intention of simplifying the

This Practice Note is designed to be read alongside the following flowchart: 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: • the periodic ten-year anniversary of the settlement's creation (the principal (ten-year) charge), and • when property (or value) ceases to be relevant property (see below) other than on excepted occasions (the exit charge) There is further guidance on this charge as it applied prior to 18 November 2015 within the subtopic. This Practice Note covers the calculation of the principal charge on relevant property on or after 18 November 2015 in further detail. The principal focus of this Practice Note is on inter vivos trusts. Is IHT an issue for a particular settlement? IHT is only charged on 'relevant property', which is defined at section 58 of the Inheritance Tax Act 1984 (IHTA 1984) to mean, subject

ARCHIVED: 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: • the principal charge • the periodic charge • the ten-year charge • the decennial charge This Practice Note explains how to work out the amount of tax payable when the ten-year anniversary fell before 18 November 2015 and the trust was created after 27 March 1974. Changes to the elements of the calculation were introduced in Finance (No 2) Act (F(No 2)A 2015). The current method of calculation for occasions of charge arising on or after 18 November 2015 is described in Practice Note: Relevant property trusts—the principal (ten-year) charge. See Practice Note: The meaning of relevant property for an explanation of what relevant property is and how the date of the anniversary is determined. The basis of the principal charge The principal charge is levied on the value of the relevant property owned by

Relevant securities include: (a) securities of the offeree which are being offered for or which carry voting rights (b) equity share capital of the offeree and an offeror (c) securities of an offeror which carry substantially the same rights as those to be issued as consideration for the offer; and (d) securities of the offeree and an offeror carrying conversion or subscription rights into any of the above.

Statutory scheme which was either established before 14 March 1989 or established after that date and registered by HMRC as a scheme which has provisions corresponding to those of an approved scheme.

“relevant tax” means— (a) income tax, (b) capital gains tax, (c) corporation tax, including any amount chargeable as if it were corporation tax or treated as if it were corporation tax, [(ca) apprenticeship levy,] (d) inheritance tax, (e) stamp duty land tax, and (f) annual tax on enveloped dwellings.

THIS PRACTICE NOTE APPLIES TO MULTI-EMPLOYER DEFINED BENEFIT OCCUPATIONAL PENSION SCHEMES This Practice Note looks at relevant transfer deductions, in particular their legislative framework, how they are calculated and any difficulties which may arise in practice. When can a relevant transfer deduction apply? Relevant transfer deductions can only apply in circumstances where a statutory debt (known as a section 75 debt) is triggered on a participating employer of a multi-employer pension scheme under the Pensions Act 1995, ss 75-75A and the Occupational Pension Schemes (Employer Debt) Regulations 2005, SI 2005/678 (together, the Employer Debt Legislation). This will be the case, for instance, where an employment-cessation event occurs, ie where a participating employer ceases to employ active members at a time when another participating employer employs at least one active member. The section 75 debt triggered on the participating employer of a multi-employer scheme (referred to in this Practice Note as the departing employer) is equal to the proportion of the total scheme funding deficit (calculated on a buy-out basis) that represents the share

Under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017), SI 2017/692, reg 42(2)(b): • a UK trust which is an express trust, or • a non-UK trust which is an express trust and which receives either UK source income or has UK situs assets, in relation to either the income or assets of which it is liable to pay one or more specified UK taxes • a non-UK trust which is an express trust (and is not an excluded trust) and ? whose trustees acquire an interest in UK land, or ? whose trustees enter into a business relationship with a ‘relevant person’ (broadly a UK adviser, including a tax adviser, lawyer or accountant), where there is at least one UK resident trustee and the trust is not required to register in another EEA state See also ‘taxable relevant trust’.