We have a case whereby a non-resident trust was created by a non-UK domiciled settlor in 2000, which owns a number UK properties via offshore companies.
On this basis as the trust assets held are outside the UK they were regarded as “excluded property” and were therefore not subject to IHT exit and principal charges.
This was until the changes which were introduced which brought such assets within the relevant property regime on 6 April 2017.
Given this consideration is being given to terminating the trust, but the IHT exit charge needs to determined.
I am somewhat at loss with this.
• Would the rate applied be the rate at the last 10 year anniversary in 2010 when trust was regarded as an excluded property trust? On this basis as the rate was Nil then no IHT exit charge would arise; or
• Would the rate applied be calculated based on the value of the trust fund at the date of the last 10 year anniversary in 2000 prorated between when the property was not relevant property up to 6 April 2017 and then relevant property thereafter? or
• Something else?
Any thoughts on this together with reporting requirements would be greatly appreciated.
TFO Tax LLP