Taxation of investment bonds held in trust
A look at who’s liable for income tax on a chargeable event gain for a bond held in trust.
Principal and Exit Charges
Help your clients by understanding the inheritance tax (IHT) charges for relevant property trusts. These can apply on entry, at every tenth anniversary and when trustees distribute capital to beneficiaries.
Learn how periodic and exit charges apply to UK trusts
Any non-exempt gifts into a trust that are subject to the relevant property regime are treated as chargeable lifetime transfers and carry with them the possibility of a number of inheritance tax charges. The relevant property regime applies to trusts such as discretionary trusts and lifetime interest in possession trusts.
Trusts within the relevant property regime can be highly effective for inheritance tax planning, but they are subject to a distinct charging structure at set intervals and when capital leaves the trust.
This briefing note explains how 10‑year (principal) charges and exit charges arise, and outlines the key steps trustees must follow to calculate and report any tax due. It will help you evaluate the long‑term tax cost of relevant property trusts and plan contributions and distributions more efficiently.
Read more about 10 Year Principal and Exit Charges.
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