Non-relevant property and Related Settlements


I am in the midst of a trust ten year anniversary calculation, and would appreciate some confirmation or otherwise of my method so far.

In summary, deceased died, leaving a Nil Rate Band discretionary trust, and residue on life interest trust for widow.

A deed of variation (effective for IHT purposes) appointed part of the Nil Rate Band discretionary trust on revokable life interest trust for widow.

Looking at the HMRC guidance for calculating the charge, I believe that in calculating the effective rate, I need to bring in the current value of the relevant property, together with:

  1. Initial value (i.e. probate value) of the non-relevant property (i.e. the element appointed to widow under the DoV), and
  2. Initial value of the related trust (i.e. the residuary life interest trust).

I have however also read s80 IHTA 1984, which is confusing me - my initial reading of this is that I can exclude both 1 and 2 above.

Can anyone confirm whether i’m reading this correctly, or point me in the right direction if i’m not?

Many thanks,

Neil Groom
Argents Chartered Accountants

For 10 year charges on or after 18 November 2015, you ignore non-relevant property in the same or related settlements (see the changes made by F(No 2)A 2015.

If the appointment to the widow was effective for IHTA s144 the property appointed is treated as never having been part of the relevant property and doesn’t have
to be brought into account either.

Anthony Nixon
Irwin Mitchell LLP