Commentary

I5.118 One settlement or more

IHT, trusts and estates

I5.118 One settlement or more

I5.118 One settlement or more

The question whether in any given circumstances there is one or more settlements is principally important for settled property which is relevant property (ie property which falls within the regime described at Division I5.3). This decision affects the dates on which the periodic charge arises, the value on which IHT is charged, and the rate at which IHT is charged.

HMRC may treat separate funds created under the same Will or deed as separate settlements, even if the trustees are the same1.

For the circumstances in which property moving from one settlement to another is treated as continuing to be comprised in the original settlement for the purposes of charging IHT on settlements containing relevant property, see I5.370.

Case law regarding number of settlements

The IHT legislation provides no general rules, but the question of whether there is one settlement or more has been considered by the Special Commissioners, the High Court and the Court of Appeal in Rysaffe Trustee Co (CI) Ltd2. It was held that the question should be answered by reference to the position as a matter of general law: if a trust practitioner determines that there are two settlements, so should the tax practitioner.

There are a number of capital gains tax cases on the problem of whether property which has come to be held on new trusts, as a result of, for example, the exercise of a power of appointment, has consequently come to be comprised in a different settlement. This particular problem hardly

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