Trust

Trust

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I have a scenario at the moment whereby a trust was created by the will of someone that passed away a few years ago. A property was sold and then cash was transferred to the trustees and this cash was then invested into various unit trusts. Now one of the trustees wishes to give up his life interest in half of the trust and they have been advised that gift relief can be claimed but my understanding of the rules is that in this case gift relief is not available. Is anyone able to clarify this please. 

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By cohen
01st Apr 2015 18:00

Hi

If it's a relevant property trust, then the giving up of the life interest may be an occasion of charge for IHT purposes, and so holdover relief could be available under s260.

This will depend upon who the life interest is being given up in favour of, and if the assets are staying in the trust, or being appointed out.

HMRC's website has some general guidance here : https://www.gov.uk/trusts-taxes/trusts-and-inheritance-tax

And the manuals around this area may also help to identify the IHT (and possible CGT holdover) position http://www.hmrc.gov.uk/manuals/ihtmanual/ihtm04084.htm

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Replying to atleastisoundknowledgable...:
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By LyneT
02nd Apr 2015 11:10


CGT holdover relief is available on a non business asset when there is an immediate charge to IHT.

Giving up a life interest is generally done in favour of the remainderman and is a PET.  So no holdover relief available.

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