PART 3 INHERITANCE TAX

Overview

This Part, which consists of 3 Chapters, contains provisions dealing with mainstream inheritance tax and with the initial 6% charge and the 1% annual charge imposed on property comprised in certain discretionary trusts.

Chapter 1 deals with the charge to tax on mainstream inheritances. It also contains provisions dealing with the disclaimer of benefits and joint tenancies.

Chapter 2 deals with the initial 6% charge imposed on certain discretionary trusts. The charge applies only where the settlor is dead and where none of the principal objects, if any, of the trust (i.e. the settlor’s spouse/civil partner, children/children of a civil partner and certain grandchildren) is under the age of 21 years (25 years where the property became subject to the discretionary trust on or after 25 January 1984 and before 31 January 1993). The scheme of the legislation is to tax the property in the discretionary trust as if the trust and the trustees took an inheritance of that property on the relevant date, and the general provisions of the Act (e.g. valuation rules) apply to those inheritances.

Chapter 3 deals with the annual 1% charge imposed on certain discretionary trusts. These trusts would normally have been liable to the 6% charge.

CHAPTER 1

General

9 Charge of inheritance tax

This section imposes the charge to inheritance tax. The tax is charged on the taxable value (see section 28) of every taxable inheritance (see section 11) taken by a successor.

Relevant Date: Finance Act 2015