Commentary

I5.304 The periodic (principal) charge—generally

IHT, trusts and estates

I5.304 The periodic (principal) charge—generally

I5.304 The periodic (principal) charge—generally

If immediately before a ten-year anniversary all or any part of the property in a settlement is relevant property (I5.303), tax is charged (without grossing up) at the effective rate as detailed at I5.353, I5.3541.

This is another context where it can be important to determine whether settled property is comprised in one settlement or several settlements for IHT purposes. For example, in Rysaffe Trustee Co (CI) Ltd v IRC2 a series of five settlements in identical terms were made by the settlor, each holding a part of a private company shareholding. HMRC argued that they were a single settlement for IHT purposes, which would have had the consequence that the shares would have been valued as a single shareholding (with a higher value than the sum of the values of the settlements' holdings valued separately). The argument was successful before the Special Commissioner but not before the High Court or the Court of Appeal.

The charge is imposed on the value of relevant property in a settlement immediately before each ten-year anniversary, so that where the ten-year anniversaries are on 16 June 2002, 2012, etc the value of relevant property subject to the charge is that prevailing at midnight at the end of 15 June 2002, 2012 etc, and it will be, for example, stock exchange quotations on 15 June rather than 16 June which will be relevant for valuation

To continue reading
View the latest version of this document, as well as thousands of others like it, sign in to TolleyLibrary or register for a free trial