I have a Pre 2024 Disc Trust which falls within the definition of a Qualifying Pre-Commencement Settlement (PCS). The draft legislation gives the Trust by virtue of s124G a fixed Trust Maximum Allowance (TMA) of £1m (now £2.5m) which is not affected by anything to do with the original Settlors.
My question is - where one Trust has two settlors do we get one or two TMA’s? It is clear for the s124F allowance for later trusts that the TMA comes directly from the Settlor so if there are two Settlors then there would be two separate TMA in the same way there are two nil rate bands.
When you do the ten year charge calculations for one trust with two settlors you do two separate calculations for the IHT, so logically this would assume two TMA allowances of £2.5m each. I just can’t get comfortable that this is intended by the legislation as the legislation refers to the Trust as a whole receiving a fixed TMA of £2.5m. Legally there are not two separate trusts there is only one.
S.44(2) is both tersely clear and a whited sepulchre or—like a sign that says “Danger! Mines”—quite useful but only up to a point. It applies generally for “this Part of this Act” i.e. Part III Settled Property—so not just to RPTs.
Given the complete absence of statutory provisions one can forgive HMRC for the parsimony of guidance in IHTM42253.
The new s.124I per Sch 12 para 5 of the Finance Bill where it uses the word “settlement” includes each separate settlement mandated by s.44(2). While the new section is not itself within Part III of IHTA it applies to an occasion of charge under ss. 64 or 65 which are: so it applies to settlements as defined in s.43(2) which are relevant property trusts (“Chapter 3 of Part 3”), confirmed by new s.124H(9), and so the identification of “settlor” and its consequences where s.44(2) applies will give each such separate settlement a £2.5m TMA. Note that each qualifying pre-commencement settlement is entitled to this TMA: there is, so far, no cap in s.124I as there is in s.124H(4) for other RP trusts!