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HMRC internal manual

Inheritance Tax Manual

Special trusts: flat rate charge

Tax is charged at a flat rate which tapers over time, depending on the period (countedin quarters) which has elapsed since the chargeable property became held on the trust. Donot count any period before 13 March 1975.

The rate is the aggregate of the following percentages:

    Effective quarters
     
0.25% For each of the first forty complete successive quarters in the relevant period 1-40 (first 10 yrs)
0.20% For each of the next forty complete successive quarters in the relevant period 41-80 (10-20 yrs)
0.15% For each of the next forty complete successive quarters in the relevant period 81-120 (20-30 yrs)
0.10% For each of the next forty complete successive quarters in the relevant period 121-160 (30-40 yrs)
0.05% For each of the next forty complete successive quarters in the relevant period 161-200 (40-50yrs)

Example

After 25 full years have elapsed, a rate of 21% will apply:

0.25% x first 40 quarters  = 10%  
         
0.20% x next 40 quarters = 8%  
0.15% x next 20 quarters  = 3%  
  TOTAL   21%  

Assessing

Use manual template IHT308 (from Temp1.exe programme). Insert values for

  • the value now chargeable,
  • the rate
  • any interest charge

and populate all other fields with a “0”, including the thresholds.

Use the notes box to add a calculation of how the rate is calculated.

See the screenprint example.

Cross-out ‘half death rates’ from the printed calculation. Remember to send acopy to Cashiers to update the accounting record. (IHTM31306)