Trusts that fall into the relevant property regime are traditional 'discretionary trusts' and those with a non-qualifying interest in possession (NQIIP), excluding favoured trusts for children and other special categories of trust.
Settlements within the relevant property regime are subject to inheritance tax charges on creation, on exits from the settlement and on each 10-year anniversary. The calculations can be complex but it is helpful to understand the building blocks of each. The IHT charge on creation is an IHT charge on a chargeable lifetime transfer by the transferor.
The settlement will keep the total of cumulative transfers of the settlor in the seven years before the trust was settled for the whole of its life.
Annual exemptions do not apply to exit charges and 10-year charges however BPR and APR may be available, but in different ways, depending on the type of charge.
The calculation of exit charges and 10-year
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Web page updated on 17 Mar 2025 16:23