IHTM27250 | Foreign property: discretionary trusts and exempt securities: exit charge

At IHTA84/S65, the rules relating to discretionary trusts provide for a tax charge when property ceases to be relevant property (leaves the discretionary trust regime). Where property in a discretionary trust becomes excluded property (and therefore ceases to be relevant property) for the sole reason that it is invested in exempt securities, the usual exit charge does not apply under the following conditions:

• Before 6 April 2025 and/or where a settlor has died before 6 April 2025

If the settlor’s domicile (under general law) was outside the UK at the time the property became comprised in the settlement

or

• 6 April 2025

• at the time the charge arises the settlor was not a long-term UK resident; or

• if the settlor has died on or after 6 April 2025 and before the charge arises, if the settlor was not a long-term UK resident at their death.

IHTA84/S65(7A) inserted by FA13/S175 provides for the same treatment to apply to investment in AUTs or OEICs (IHTM04262).