SolvedIHTM42801 | Special trusts: summary
From HM Revenue & Customs · Inheritance Tax Manual
Categories
Types of excluded discretionary trusts known commonly as special trusts (or favoured trusts) are
Temporary charitable trusts
Protective trusts
Trusts for disabled persons
Employee and newspaper trusts
Accumulation and maintenance trusts (A&M) prior to 22 March 2006.
Other excluded trusts and property within IHTA84/S58 are
Heritage Maintenance trusts
Pension funds
Trade or professional compensation funds
Asbestos Compensation trusts
Decommissioning Security trusts
Excluded property
Charges on the trusts
The common feature of these types of settlement is that they do not contain relevant property, and so are not subject to the ten year anniversary and proportionate charges under IHTA84/S64 and IHT84/S65. However, the property may be subject to a different charge on leaving the trust or where the trust no longer satisfies the conditions for special treatment or where the trustees make an uncommercial disposition that reduces the value of the trust property.
There is a normal Inheritance Tax (IHT) exit charge (IHTA84/S65) when an existing discretionary trust is converted into one of these special trusts. (IHTM42110)
Two new types of trust were introduced in FA2006 which also have their own IHT charging regime