Heritage maintenance funds
Trusts that hold funds to pay for the maintenance of historic property are known as heritage maintenance funds (HMFs).
The historic property, which might include buildings, land or chattels such as furniture and works of art, may be held by individuals, or in a trust.
The HMF holds other income-generating assets to provide funds for the upkeep of the historic property. How a HMF is taxed depends on various things including whether there is a heritage direction in force - see below.
If the historic property is of sufficient historical significance, it may be ‘approved heritage property’ and certain Inheritance Tax advantages apply. The responsibility for deciding whether the historic property is of sufficient historical significance and whether the HMF satisfies certain conditions lies with Trusts & Estates Inheritance Tax Heritage Section, Nottingham. If the relevant provisions apply, that office
- will issue a direction under Paragraph 1, Schedule 4 IHTA 1984
- advise Trusts & Estates Nottingham of the existence of the HMF.
Where the Inheritance Tax Heritage Section have issued a direction, there are special income tax provisions for HMFs in ITA/Part 9,Chapter 10. ITA/Sections 507 to 510 allow us to disapply certain taxing provisions on the settlor and any occupier of the heritage property. ITA/S511 prevents double taxation of the settlor. ITA/Sections 512 to 517 provide for an additional tax charge on the trustees if the HMF does not stick to the rules agreed with Trusts & Estates Inheritance Tax Heritage Section, Nottingham.
If the Inheritance Tax Heritage Section do not issue a direction, the normal trust rules apply for income tax purposes.
Trusts & Estates office dealing with HMFs
Trusts & Estates Edinburgh deal with compliance work on HMFs.
Offices other than Trusts & Estates Nottingham- If you learn of a HMF, pass what information/documentation you have to HMRC Trusts & Estates Nottingham. Do not set up the case in your office.