Commentary

I1.402 Settled property

IHT, trusts and estates

I1.402 Settled property

I1.402 Settled property

Discretionary trusts continue to be taxed under IHT in the same way as under CTT. Under CTT, a transfer of property into a discretionary trust was immediately chargeable (ie not potentially exempt). The CTT system (introduced in 1982) of periodic and exit charges for property held on discretionary trusts is continued under IHT with very little modification, see Division I5.3.

The policy of both estate duty and CTT of taxing settled property subject to an interest in possession as if it were the absolute property of the person entitled to the interest was followed for transfers after 16

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