Exit charge on 18-25 Trust


Hi, I have a situation where the testator passed away pre-Finance Act 2006 with a Will providing for a share of residue to pass to his children absolutely on reaching the age of 25. One of the children turned 18 in 2010, will be 25 later this year and it is proposed the child should take their share of the trust absolutely now.

I am calculating the potential exit charge and my understanding is that this is done using the value of the trust at inception and the current nil rate band in force. The value of the trust at the date of the testator’s death was less than the current NRB of £325,000. On that basis there is no tax to pay. Could anyone confirm that my understanding is correct?

I am doubting myself because the current value of the trust is over the NRB and the trust spans the FA 2006 changes.

Samantha Walker