IHTM42117 - Proportionate charges: excluded periods

First quarter

Proportionate charges can arise at any time during the life of the trust except that under IHTA84/S65 (4), no proportionate charge arises if the exit event occurs in the first quarter following

• the day the settlement commenced, or
• the date of a ten year anniversary.

In these two periods, any exits are free of inheritance tax. However, there is no chargeable event for inheritance tax, so the trustees will not be able to claim Capital Gains Tax holdover relief under TCGA92/S260. ( CG66883)

See Frankland v IRC [1996] STC 735.

New will trusts - S144

IHTA84/S144 allows trustees to distribute from a will trust within two years of the death without a proportionate charge arising. ( IHTM35181)

Again, there is no chargeable event, and so holdover relief does not apply to the transfer for CGT purposes.