Relevant property: capital and income
Value the assets at their open market value.
You should value a distribution or disposition subject to a proportionate charge on a ‘loss to the settlement’ basis. (IHTM42119)
Be aware that further additions may have been made by the setlor. If worthwhile, find out the reason for a substantial increase in value of a fund at a distribution.
When income is accumulated it is converted to capital at that date. It becomes relevant property and is within our claims for tax. As it becomes capital at a date later than the settlement date, accumulated income invariably attracts relief under IHTA84/S66 (2)
Where income on hand has not been accumulated, it is undistributed income. Thus it is not capital, it is not relevant property, it is excluded from any inheritance tax charge and it is usually not included in the IHT100. However, the position is different where the ten year charge arises on or after 6 April 2104 (IHTM42166)
IHTM42224 contains more information about powers of accumulation.
TYA reliefs for additions
Relief under IHTA84/S66 (2) can only be given on the tax payable on property obtained out of accumulated income. If the property obtained qualifies for 100% AR/BR then no S66(2) relief can be given on that particular item as no tax is payable.
If the accumulated income has been spent on existing relevant property, relief can only be given on the amount of the uplift in value of the property by having the income spent on it.