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HMRC internal manual

Inheritance Tax Manual

Employee benefit trusts: sub-trusts: revocable or irrevocable sub-trust

When considering the trusts applying to the settled property you should consider the current trusts that apply. It does not matter that these can change in the future.

The wording of IHTA84/S86 is very specific in that it applies where settled property is held on trusts which ‘either indefinitely or until the end of a period (whether defined by a date or in some other way)’ meet the relevant conditions.

It is irrelevant whether the sub-trust is revocable or irrevocable as this does not affect the terms of the trust applying to the settled property at that time.

Further guidance on the position once the trusts have changed and no longer satisfy the provisions of IHTA84/S86 can be found at IHTM42001.