NRBDT comprising a secured equitable charge over property transferred to W after H’s death many years ago.
To maximise RNRB on W’s death going forward the trustees are now considering releasing equitable charge and replacing this within the trust with an IOU in their favour from W but unsecured.The concern is SDLT.
The HMRC SDLT manual (for any settlement other than a bare trust) says;
"Where payment for a power of appointment or discretion to be exercised is made, it will be treated as consideration for the acquisition of a land interest through the exercise of the power or discretion.
Therefore, where consideration is provided to the trustees in exchange for the excise of their power of appointment so that an interest in land passes out of the trust to a person, the consideration so provided is treated as consideration for the acquisition of the relevant interest in land."
It seems then that SDLT will therefore be potentially be payable depending on the amount of the consideration.
What please are other members views and how are others treating similar trusts to maximise the RNRB going forward.
Angela Scott
Thomson & Bancks LLP