Exit charges before 10 year anniversary

Trusts Discussion
1

Are exit charges payable before the 10th anniversary if the distribution is of the entire trust assets, ending the trust?

David lewitt
Willpower

2

yes-based on the value of the assets when they went into the trust.

Simon Northcott

3

Yes

If before the first 10 year anniversary, they are calculated by reference to the value of assets immediately after they were settled.

If any assets qualified for APR or BPR when settled, it should be noted that immediately after settlement the trustees will not have held those assets for the qualifying period, and so that no reliefs would be available to reduce any exit charge.

If the trust was created on death, it might also be noted that only the “normal” NRB is available against any exit or periodic charge, so that if any transferable NRB was claimed on the death this cannot be used to reduce the potential tax charge on any later event.

Paul Saunders

4

Thanks Simon

So if assets £325k or less on entry then no tax to pay?

David lewitt
Willpower

5

In principle, yes, but it will be based on the value of the assets at the ‘last 10 year point’ which, in this case, will be when the trust commenced.

Kamlesh Samji
KRS Estate Planning