27.6.1 Introduction

As this is a discretionary trust, special IHT charging rules apply. Under these rules there may be a potential IHT charge:

on every ten-year anniversary of the trust – ‘the periodic charge’; or

whenever property leaves the trust (e.g. when capital is advanced to a beneficiary) – ‘the exit charge’.

The rules on the IHT treatment of discretionary trusts were reviewed in 2013–14 but the Government announced in the 2014 Autumn Statement that no substantial changes were to be made to the current system.

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