Nil Rate Band s

Trusts Discussion
1

Hello

I have a client who set up two trusts in 2016. One was a trust intended to receive surplus income (so that the transfers in could be covered by the annual exemption) and the other was set up jointly with his spouse and was intended to receive capital. Ordinarily if the trusts are set up on the same day by the same person, they would share a nil rate band. Is there any exemption for this because one of the two trusts is receiving surplus income? Would it have made a difference if they were dated different days in 2016? Or do the two trusts have to share his nil rate band (£325,000 at the time) so that the income trust gets a NRB of £162,500 and that capital trust gets a NRB of his other £162,500 and his wife’s full £325,000 (she wasn’t a settlor for the income trust).

Many thanks
Rhiannon Coleman
Taylor Vinters

2

You effectively have three settlements for IHT purposes being the Husbands sole settlement, the husbands share of the joint settlement and the wife’s share of the joint settlement. If made on the same day the husband’s settlements will be related for the purposes of the exit and 10yrly charges. The wife’s settlement stands alone.

The fact that husbands sole settlement is receiving excess income makes no difference to this. If they had been made on different days they would not have been related settlements

Nigel Scase
Greene & Greene

3

Thanks Nigel, that’s really helpful.

Rhiannon Coleman
Taylor Vinters