Commentary

I5.631 Tax implications

IHT, trusts and estates

I5.631 Tax implications

I5.631 Tax implications

Where a trust satisfies the conditions detailed in I5.630:

  1.  

    •     The settled property is treated as comprised in one settlement1.

  2.  

    This is convenient because otherwise each contributor to a trust would be regarded as a separate settlor of a separate settlement. If the settled property ceases to satisfy the requirements of IHTA 1986, s 86, for example, by remainder trusts coming into effect for the benefit of persons other than those mentioned in IHTA 1986, s 86(1) this provision will, apparently, no longer apply

  3.  

    •     Where settled property to which the employee trust conditions apply ceases to be comprised in a settlement and, either immediately or not more than one month later, the whole of it becomes comprised in another settlement, then, if the employee trust conditions again apply to it when it becomes comprised in the second settlement, it shall be treated for all the purposes of IHTA 1984 as if it had remained comprised in the first settlement2.

  4.  

    This overcomes the problem caused by the perpetuity rule applying to these trusts. It allows the property subject to a trust to be resettled once the perpetuity period applicable to the trust has expired without a charge to tax on the distribution of the settled property3 or on a resettlement within one month.

  5.  

    The relief will not be available if any part of the settled property which ceases to be comprised in the first settlement does not become comprised in the second settlement, and

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