10 Year Charge Queries

I have a Trust which has just passed a 10 year anniversary. The Trust, was created 20 years ago on the same day as two other Trusts. At settlement each Trust was an A&M. The other two Trusts were qualifying IIP’s by 22 March 2006; each Trust has a sole beneficiary and the beneficiaries had reached the date that income was awarded to them.

For this Trust however, a qualifying IIP was not in place by 22 March 2006, nor did the Trustees change the deed so as to fall into an 18-25 Trust. The beneficiary received their right to capital in the period between 22 March 2006 and 6 April 2008.

Question 1, When calculating the value of the property comprised in the Trust, related settlements must be taken into account (s66(4)), however this charge is occurring after 17 November 2005. Does the initial value (and additional transfers caught by the same day additions rule s62a) of these two other Trusts (which are not relevant property) no longer need to be included in our calculation? I have read regarding the 17 November 2005 date but cant seem to find the legislative reference.

Question 2, the first 10 year on the property was overlooked due to the legislation change. I am also reporting this now. From what date is the property within the relevant property regime; 6 April 2008 or the date the beneficiary received his right to income? I recall the latter being the case from my training but again cant find the legislative reference.

Question 3, the Trust was created by husband and wife. Are two IHT forms needed to take account of the Trusts 2 NRB’s or can they be combined on one form?

Claire Spinks
British Taxpayers

Presumably you mean received their right to income rather than capital in your second paragraph.
Q1 do you mean November 2005 or 2015? My understanding is that they do not need to be taken into account in 2019, but I stand to be corrected.

Q2 If this trust(s) was/were relevant property then IHT return(s) should have been done in 2009 as you note. The trust(s) would have been within the relevant property regime from 6 April 2008 and the rate would have been pro-rated for the period between 6 April 2008 and the 10 year anniversary.

Q3 Technically I believe that two IHT forms would be needed as for IHT there are two separate trusts created by two separate settlors, although in practice I have seen examples of HMRC treating them as both two separate trusts and as one trust, where the same couple created several trusts together every couple of years throughout the 1960s.

Maxine Higgins
Citroen Wells

Seen typo in second para. Should have read that the beneficiary received their right to income in the period 22 March 2006 and 6 April 2008.

Claire Spinks
British Taxpayers

Hi Maxine

Yes - I did - bad typo!

Yes November 2015 - also another typo! what was I doing that day :slight_smile:

Ok, so that would follow my reading - that non relevant property trusts that would otherwise be caught under s62 and s62a can be ignored.

Ok, thank you for confirming,

Ok, for completeness I might complete a IHT return for each settlor and combine under a letter

Thanks for your help.

Claire Spinks
British Taxpayers