Exit charge

Produced by a Tolley Trusts and Inheritance Tax expert
Trusts and Inheritance Tax
Guidance

Exit charge

Produced by a Tolley Trusts and Inheritance Tax expert
Trusts and Inheritance Tax
Guidance
imgtext

This guidance note explains how to calculate the inheritance tax payable when an exit charge arises on or after 18 November 2015. The former method of calculation is outlined in the Calculation of exit charge before 18 November 2015 guidance note with a summary of the changes given below.

The exit charge

When trust property ceases to be relevant property, it becomes subject to a charge to inheritance tax. This charge is known as either:

  1. the exit charge

  2. the proportionate charge

IHTA 1984, s 65

See the Relevant property guidance note for an explanation of what relevant property is.

The comments on obtaining valuations in the Principal (10-year) charge guidance note apply equally here.

As explained in the Principal (10-year) charge guidance note, relevant property is subject to a principal charge on each 10th anniversary after the trust was created. If property leaves the trust, it will escape the charge on the next 10-year anniversary, although it will have been relevant property for part of the 10-year period. To compensate

Continue reading the full document
To gain access to additional expert tax guidance, workflow tools, generative tax AI, and tax research, register for a free trial of Tolley+™
Powered by Tolley+

Popular Articles

Losses on shares set against income

Losses on shares set against incomeUsually, allowable capital losses can only be set against chargeable gains. If the losses are not fully utilised against gains in the year in which they arise, the excess is carried forward to use against future gains. See the Use of capital losses guidance note

14 Jul 2020 12:12 | Produced by Tolley Read more Read more

Gilts

Gilts‘Gilts’ are securities that are also known by a number of different names (eg gilt-edged securities, Government securities or treasury stock).The Government sells gilts to fund the deficit between public spending and tax receipts. Normally, the Government pays interest to the holder of the gilt

14 Jul 2020 11:48 | Produced by Tolley Read more Read more

Bare trusts ― income tax and CGT

Bare trusts ― income tax and CGTThis guidance note explains how trustees of bare trusts are treated for income tax and capital gains purposes. Although a bare trust is, in equity, a type of trust, for both income tax and capital gains tax purposes its existence is transparent. This means that no tax

14 Jul 2020 15:34 | Produced by Tolley Read more Read more