we have been asked to prepare a 10 year charge calculation for two trusts. each created by the same settlor, within 2 days of each other. No additions were made to either trust since original settlement
The IFA, who advised, just made comment that each would benefit from a full NRB.
Surely the second Trust (created two days after the first), would have a NRB but it would be reduced by the value of the first trust. Am I missing something?
You are correct.
As you know, the periodic charges are calculated on the 10 yearly anniversary of each trust. In your example, presuming there are no other chargeable lifetime transfers aside from these two, on the 10 yearly anniversary of the first trust, this will use up some, or all, of the available nil rate band first. Then 2 days later, on the anniversary of the second trust, the nil rate band available to that trust will be reduced by the other chargeable lifetime transfer made by the settlor 2 days earlier.
This is an example of the Rysaffe Principle.
Claire, Were the two trusts created on separate days with a nominal initial settlement then settled with the cash/investment?
Countrywide Tax and Trust Corporation Ltd
Two Trusts - two days apart, not settled with nominal amounts.