Exemptions: maintenance funds
A maintenance fund is a special type of trust which is primarily for the maintenance of an outstanding historic building including any associated amenity land and objects. Alternatively the trust may be for the maintenance of land of scenic, scientific or historic interest.
IHTA84/S27 (1) is the main provision for exempting transfers into maintenance funds. Under that subsection a transfer of value (IHTM04024) is an exempt transfer to the extent that it is attributable to property which because of the transfer, becomes comprised in a settlement. IHTA84/S57 (5) extends the exemption to where an interest in possession (IHTM16061) in a settlement comes to an end.
Under IHTA84/S27 (2), IHTA84/S23 (2) and IHTA84/S23 (3) and IHTA84/S24 (4) apply to the exemption. So, the instructions on the limitations (IHTM11171) to charity exemption and application of charity exemption to settled property (IHTM11161) apply to this exemption. The instructions on quantifying exemption (IHTM11192) for gifts to political parties also apply.
In applying IHTA84/S27 (2) property is given to any person or body if it becomes the property of or is held on trust for that person or body. The word ‘donor’ is construed in the same way. You should also note the following restrictions and exclusions that operate in connection with maintenance funds:
- exemption is restricted on death if the trustees of the maintenance fund settle (IHTM11026) a claim (IHTM11025) against the deceased’s estate otherwise then out of assets of the estate.
- exemption does not apply to property given to a maintenance fund in consideration of a reversionary interest (IHTM11162) in settled property if, by reason of IHTA84/S55 (1), the reversionary interest does not form part of the IHT estate of the person acquiring if that person already has a prior interest in the same property
- under IHTA84/S56 (3) (a) the exemption can apply on the termination (IHTM11161) of an interest in possession in settled property only if the settlement comes to an end on the ending of the interest in possession (at least to the extent to which the settled property is given to the maintenance fund).
- IHTA84/S27 does not apply if, broadly, the property was comprised in another settlement and the trustees of the maintenance fund have bought an interest (IHTM11164) under the settlement.