IHTM42089 - Ten year anniversary: relief for double charges

If property has바카라 사이트¯바카라 사이트¯Ìý

  • been subject to a proportionate charge within the ten years preceding the바카라 사이트¯ten year바카라 사이트¯anniversary바카라 사이트¯(TYA), and바카라 사이트¯바카라 사이트¯Ìý

  • later becomes relevant property, and바카라 사이트¯Ìý

  • is now subject to the IHTA84/S64 charge at the TYA,바카라 사이트¯바카라 사이트¯Ìý

apply IHTA84/S67 (6) relief against the TYA claim for the potential double charge.바카라 사이트¯â¶Ä¯Ìý

These cases areÌýrare, butÌýmay occur where a settlor ceases to be long-term UK resident (IHTM47000) and becomes long-term UK resident again before the ten-year anniversary.Ìý

Without a relief the value of the proportionate charge바카라 사이트¯Ìý

  • would be cumulated at the TYA under IHTA84/S66 (5)(b), and바카라 사이트¯Ìý

  • it would be reflected in the taxable TYA fund.바카라 사이트¯Ìý

Applying the relief바카라 사이트¯Ìý

Apply the relief by reducing the trust바카라 사이트™s cumulative total at the TYA by whichever is the lower value of바카라 사이트¯Ìý

  • The value on which tax was charged for the proportionate charge (or the proportion of it falling back in), or바카라 사이트¯Ìý

  • the value of the property (or proportion) as reflected in the TYA fund.바카라 사이트¯Ìý

Note that the reduction is to the trust바카라 사이트™s cumulative total, not to the taxable TYA fund itself. The relief can apply to more than one event.바카라 사이트¯Ìý

ExampleÌý

  • A non-interest in possession settlement dated바카라 사이트¯17 November바카라 사이트¯1991바카라 사이트¯had its first TYA on 17 November바카라 사이트¯2001. The settlor had made no chargeable transfers in the 7 years before the trust commenced.AÌýlife interest in a quarter of the fund was appointed to Mary on 15 May바카라 사이트¯2005. Value of the transfer for the proportionate charge was then £300,000.바카라 사이트¯â¶Ä¯Ìý

  • Mary dies on 28 October바카라 사이트¯2008바카라 사이트¯and the transferred assets fall back into relevant property.바카라 사이트¯Ìý

  • At the TYA on 17 November 2011 the value of the proportionate charge portionÌýas existing in the whole fund can be identified as £200,000.ÌýThe settlement바카라 사이트™s cumulative total (which would otherwise be £300,000) will therefore be reduced by £200,000 to £100,000 under IHTA84/S67 (6).If there existed other proportionate charges unaffected by IHTA84/S67 (6) which caused the nil-rate band to be exceeded, the reduction by -£200,000 would make no difference to the calculation of rate 바카라 사이트“ the TYA would still be taxed on a maximum 6%.바카라 사이트¯Ìý

ExampleÌý

  • Manhar, a long-term UK resident,Ìýmakes a trust with foreign assetsÌýin Year One.ÌýÌýÌý

  • Whilst he is a long-term UK resident, theÌýassets are relevant property.Ìý

  • Manhar ceases to be a long-term UK resident in Year Three and pays a proportionate chargeÌýon the value of the trust fund, which is £600,000.ÌýÌýÌý

  • Manhar returns to the UK and becomes long-term UK resident again in Year 7.ÌýÌýÌý

  • At the TYAÌýin Year 10, the settlement바카라 사이트™s cumulative totalÌý(ordinarily £600,000, givingÌýa full rate of 6%Ìýat the TYA) will be reduced. ÌýAt the TYA, the fund is worth £540,000. The settlement바카라 사이트™s cumulative total will therefore be reduced under IHTA84/S67 (6) by £540,000 (to £60,000,Ìýgiving a rate lower than 6%).Ìý

Interaction with IHTA82/S66 (2) reliefÌý

In the typical case where S67(6) applies, the property in question has once again become relevant property comprisedÌýin the settlement. As it has not been relevant property throughout the period of ten years preceding the TYA, then relief under S66(2) will be due.바카라 사이트¯(IHTM42088)Ìý
Ìý
This is not a duplicate reliefÌý

  • S67(6) operatesÌýon the cumulative value only,Ìý

  • S66(2) operatesÌýon the rate of tax upon relevant propertyÌý