Hello.
I have a RPT and the trust deed has a wide range of beneficiaries and allows the trustees to give to charity. There is a particular charity at the moment that the trustees would be interested in donating to using some of the accumulated capital as it is in connection to the deceased settlor and a donation of an asset they made well before they passed away.
I was thinking about the ten year charge and exits. Charitable payments are usually exempt from IHT so would there be an exit charge and would this be included as part of the next TYC?
The legislation at S76 IHTA1984 states tax shall not be charged if property ceases to be relevant property on becoming âproperty held for charitable purposes onlyâ.
It has been suggested to me that this âbeing heldâ phrase means a donation to charity would trigger an exit charge/be included in the TYC comp but a payment that is âearmarkedâ for charity and set aside, so becomes âheldâ for charitable purposes before donation, would not.
I have also seen commentary that states:
Moreover, under [IHTA 1984, s 76], payments or appropriations by discretionary trusts to such charities, or indeed to political parties, national museums etc are not liable to the interim IHT exit charge.
Anyone know if a âstraightâ donation is indeed exempt and so would be ignored for an exit and in the TYC computation? Or if we have to âjump through the hoopâ.
I am leaning towards being âsafeâ and setting aside the amount before donation but to avoid some paperwork, etc interested in views/experience of this.
Thanks.