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10 year charge - former life interest trust

Trust has become discretionary following death of life tenant - date for 10 year charge?

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A trust which was formerly a life interest trustĀ has become discretionary following death of life tenant.

The value of the property within the trust at the date of death formed part of the sum assessed to IHT in respect of the life tenant's estate.

The trust at that point became discretioanry in nature.

Please can you confirm that the date for theĀ 10 year charge in respect of this trust will therefore be the 10 year anniversary of the point at which the trust became discretionary (the date of death of the life tenant) as opposed to being the 10 year anniversary of the creation of the trust?

Many thanks

Replies (5)

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By cohen
19th Feb 2020 13:51


The ten year anniversary date is based on the original start date of the trust, not the date at which it became discretionary.

When you do the ten year anniversary though, you effectively time-apportion the charge, to reflect the fact that the assets haven't been relevant property for IHT for the whole ten years (just the period since it became discretionary).

Thanks (1)
By Tax Dragon
19th Feb 2020 14:05

I agree with cohen and HMRC - unless perhaps s80 IHTA is relevant.

Thanks (1)
Jennifer Adams
By Jennifer Adams
22nd Feb 2020 14:57

Its the original state date.

See here for details on the workings of trusts

Thanks (0)
Replying to Jennifer Adams:
By Tax Dragon
22nd Feb 2020 19:27

You mean the s60 date? A date which may need to be determined in accordance with s80.

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