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HMRC internal manual

Inheritance Tax Manual

Settled property: charges on employee and newspaper trusts

Property (IHTM04030) held on discretionary trusts under which, for any defined period, or indefinitely, the property can be applied only for the benefit of employees in a particular occupation or of a particular firm, or the relatives or dependants of such employees, IHTA84/S86, is not relevant property, IHTA84/S58 (1)(b),and so is not liable to the ten year or proportionate charge.

Distributions to the employees or their relatives or dependants are normally exempt.

Tax is charged when property ceases to be held on employee trusts or when the trustees make a disposition (IHTM04023) which reduces the value of the property so held, or when payments are made to participators, IHTA84/S72 (2).

Property subject to an interest in possession is disregarded if the interest extends to less than 5% of the property, IHTA84/S86 (4)(b).

Under IHTA84/S70 (4) relief for dispositions not intended to confer bounty (IHTM04161) and a grant of a tenancy of agricultural property (IHTM04230) can apply.

The tax treatment of trusts for newspaper publishing companies or newspaper holdings companies follows the treatment of for employee trusts, IHTA84/S87.