Settled property: charges on accumulation and maintenance trusts
Property (IHTM04030) held on discretionary trusts which come within the inheritance tax definition of an accumulation and maintenance settlement is not relevant property and therefore exempt from the ten-yearly and proportionate charges.
Tax is charged
- where property held on accumulation and maintenance trusts ceases to be held on those trusts, IHTA84/S71 (3)(a) or
- when the trustees make a disposition (IHTM04023) which reduces the value of such property, IHTA84/S71 (3)(b). The charge is on the amount by which the value of the settled property is reduced as a result of the event giving rise to the charge, IHTA84/S70 (5). Grossing up is required if the trustees pay the tax out of property remaining in the settlement. Under IHTA84/S70 (4) relief for dispositions not intended to confer bounty (
There is no charge where settled property ceases to be held on accumulation and maintenance trusts
- because a qualifying beneficiary becomes entitled to the property or to an interest in possession in it, IHTA84/S71 (4)(a) or
- because a qualifying beneficiary dies before becoming entitled, IHTA84/S71 (4)(b).Distributions to charities or other exempt bodies are not liable to the charge.