Discretionary Trust Tax

A once-off Inheritance Tax applies to property subject to a discretionary trust on 25 January 1984, or becoming subject to a discretionary trust on or after that date. The current rate of tax is 6%. In certain cases the 6% rate can be reduced to 3%.

An annual Inheritance Tax at the rate of 1% applies to property subject to a discretionary trust on 31 December in each year from 2006 onwards. Prior to 2006, the annual charge applied to property subject to a discretionary trust on 5 April in each year commencing with the year 1986.

The Finance Act 2012 introduced a numbers of amendments to Discretionary Trust Tax.

pdfPart 05 (PDF,118 KB) of the Capital Acquisitions Tax Manual has been updated to take account of these amendments.


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