Relevant property

Produced by a Tolley Trusts and Inheritance Tax expert

Trusts and Inheritance Tax

Guidance

This guidance note explains the relevant property regime for inheritance tax. It will help the practitioner to identify relevant property by the terms of the trust and the relevant dates involved in its creation. It also explains how to identify the date on which the trust was created for exit and 10-year charge purposes.

Significance of relevant property

The term ‘relevant property’ defines a category of trust property which is subject to a special regime for inheritance tax. As described in the Taxation of trusts ― introduction guidance note, the inheritance tax treatment of trust property falls into two broad categories:

•
beneficial entitlement
•
relevant property

In the ‘beneficial entitlement’ category, trust property is subject to inheritance tax as if it belonged outright to the beneficiary. It is deemed to belong to the beneficiary and is treated as part of their estate. Typically, this treatment applies where the beneficiary has a qualifying interest in possession (QIIP), or an absolute entitlement to the trust property such as property held by another as bare trustee.

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