Meg Saksida reveals the logic behind some potentially tricky IHT calculations concerning relevant property trusts.
A relevant property trust (RPT) for inheritance tax (IHT) purposes is broadly one that was either a discretionary trust prior to the trust changes in March 2006, or a lifetime trust that was not a qualifying interest in possession (QIIP) after that date.
Relevant property charges
Relevant property trusts have three different taxable IHT charging points. The first is the ‘entry’ charge. The trustees are charged at half the death rate of IHT (20%) when the trust is settled. The charge is only levied to the extent that the amount settled exceeds the nil-rate band of the settlor, considering any chargeable lifetime transfers the settlor has made in the previous seven years. The second is the ‘anniversary’ charge. The trustees are charged
