Start date of trust - deed of variation deceased died pre budget day 2024

Trusts Discussion
1

My deceased died 30.12.23, with a significant estate including farmland. Estate given to only child absolutely.

If a deed of variation was completed prior to 30.12.25 which contained the necessary elections then S83 IHTA 1984 provides that the start date of the trust will be the date of death.

The TRS rules state that the start date is the date of the deed of variation.

Do we therefore have different start dates for different purposes?

My concerns are:

1.If a deed of variation was entered into which created a discretionary trust containing farmland would, due to S83, there be 100% APR on all eligible farmland rather than a limit of £1m following the budget in October 2024?

2. If statement at 1 correct then if the trust was wound up prior to 30.12.33 (ie just before 10th anniversary of death) the assets could then (under current rules) be taken out with no exit charge?

Is the above right or is there draft legislation to alter the position following last years budget?

Thanks

2

You are talking about 2 separate issues – IHT and TRS.

Yes, for IHT, the “start date” will be the date of death, from which the periodic charges will be measured against.

However, for TRS the “start date”, which I believe means the date when the trust becomes registrable, will be the date of the deed of variation.

With regard to the specific questions:

  1. If the variation is effective under s.142 IHTA 1984, the terms of the variation will be deemed to effective from the date of death – 30.12.2023 – and the IHT rules as at that date will apply.

  2. In general, that is my understanding, although it is subject to the property which attracted APR/BPR as at the date of death still being held within the trust at the time of the distribution.

Paul Saunders FCIB TEP

Independent Trust Consultant

Providing support and advice to fellow professionals

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