IIP into 2nd IIP on death - dates for RPT status

Trust set up by will in July 2002 - life interest to surviving spouse, then second life interest to (adult) daughter on her death, with capital entitlement to daughters children (Also adult). Surviving spouse died December 2009, at which point the trust became a relevant property trust for IHT purposes.

The points at issue are when the trust commenced for reference date for 10YA charge purposes - first death in July 2002 or 2nd death in December 2009? Will be relevant in terms of 10YA charge date and the possible winding up of the trust being considered now.

Trying to work out whether there is a full 10YA charge at December 2019 or whether there should have been a partial 10YA charge (As added property) in July 2012, which will affect any exit charge if the trust is wound up. Conflicting advice already received.

Sarah-Jane Statham
Gopsall Services Ltd

See s.83 IHTA 1984 - the ten year anniversary is by reference to the date of death.

Graham Barry
New Quadrant Partners Ltd

Thank you.

So on that basis - whose death? The settlor (died 2003) or the life tenant (died 2009)? The reason for the question was this I had started from S83 also and the date of death of the settlor, but colleagues had said in their opinion it was not an RPT until the death of the first life tenant. If so, the commencement date is the date it becomes an RPT.

Taking the 2003 death as commencement date, would you work the same rules as for A & M - so 10YA 2013 but treat as added property in 2013? Trying to work out the effective rate as they wish to appoint all assets out.

thanks again

Sarah-Jane Statham
Gopsall Services Ltd

The settlor’s (testator’s) death, so this would work the same as an old A&M with 10YA in 2013 but treated as added property in 2009 when it became relevant property.

Graham Barry
New Quadrant Partners

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Thank you. It’s nice to have back up for my opinion.

Sarah-Jane Statham
Gopsall Services Ltd

I agree that s83 IHTA sets the date for the anniversary charges by reference to the date of death.

But for the purposes of the calculations under chapter III I believe s80 provides that the settlor will be the spouse who died in 2009 not the testator who died in 2002.

Nigel Scase
Greene & Greene