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HMRC internal manual

Inheritance Tax Manual

HM Revenue & Customs
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Employee benefit trusts: conditions for relief: direction to waive dividends

The settled property referred to in IHTA84/S86(1) is the capital of the trust fund and does not include the income element. So, where the trustees waive any rights to future dividend payments on ordinary shares within the trust fund:

  • there cannot be any accrued income in respect of those dividends, and
  • there is no question of the future dividends being settled property for IHTA84/S86 purposes.

Where the trustees waive any right to all future dividend payments on shares within an employee benefit trust you should not argue that this will benefit people who are not qualifying beneficiaries with the result that the trust cannot qualify under IHTA84/S86.