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HMRC internal manual

Capital Gains Manual

2006 IHT changes: IHT treatment from 22 March 2006: other trusts

The generality of trusts will in increasing numbers be Relevant Property Trusts. Transfersinto such trusts, except from other such trusts, are chargeable transfers. In additionthere is an exit charge when property leaves the trust and a deemed chargeable transferevery ten years on the anniversary of the formation of the settlement.

Where property is transferred by an individual into a settlement during his lifetime on orafter 22 March 2006 it is a gift to a Relevant Property Trust, and therefore a chargeabletransfer, except for transfers to certain special trusts which are not considered here,and a transfer to a Disabled Deemed or Actual IIP trust. Although the transfer mayapparently be an addition to a trust of a different class, for IHT the gift is regardedseparately.

Where a trust is created by a Deed or other Instrument of Variation, and the appropriatestatement is made in the deed or other Instrument under IHTA84/S142 (2) the effect of S142(1), is that in determining what Class of trust there is one applies the rules relating towills. This is because ‘this Act’ applies as if the variations were in the will.Similar considerations do not apply to CGT in for example identifying the settlor. SeeTCGA92/S68C.