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HMRC internal manual

Inheritance Tax Manual

The settlor: more than one settlor

In most cases, a trust has only one settlor.

Where more then one person has contributed assets into a settlement, each person is treated as having made a separate trust.

  • This IHTA84/S44 (2) rule is subject to IHTA84/S48 (4 to 6), which relates to excluded securities, issues before 10 December 1981, and transfers from one settlement to another without anyone being entitled to a beneficial entitlement in between.

The everyday example of one apparent trust which has two (or more) settlors and comprises two (or more) separate trusts, is where one member of a family sets up the trusts, transferring property and executing the deeds. Then another member of the family decides to add cash or property to the trust.

If you notice that an apparent single trust has funds provided by another person, raise the issue that a separate trust has been made for inheritance tax purposes, mentioning IHTA84/S44 (2).

This separation has 3 main effects

  • Where more than one trust exists each will have its own nil-rate band for rate purposes.
  • The value of property may be affected. For example, holdings of unquoted shares in a single trust might amount to a control holding whereas the same parcels of shares would be minority holdings if taken separately.
  • The separate trust made by the second person will have its own starting date. (IHTM42221)


IHTA84/S44 (2) says that, where more than one person is a settlor in relation to a trust and the circumstances so require, inheritance tax provisions shall have effect as if the settled property were comprised in a separate settlement.

In practice, you can take the phrase ‘and the circumstances so require’ to mean, ‘in a simple and straightforward case’. You can accept the separateness of direct additions made by the settlor’s favourite aunt, but if for instance the added property is situate in Liechtenstein and transferred by a nominee in Liberia to a trust company in Jersey you would need to satisfy yourself as to what the circumstances were and whether they require treatment as separate trusts.

Where it is material, discuss any queries about who actually was the settlor with your manager.