Inheritance Tax Act 1984 section 66

Rate of ten-yearly charge

Section 66 sets out how to calculate the rate of inheritance tax charged on relevant property in a discretionary trust at each ten-year anniversary.

• The ten-yearly charge is levied at three tenths of the effective lifetime rate, producing a maximum rate of 6% (i.e. 3/10 × 20%).
• The rate is reduced by one fortieth for each complete quarter during the preceding ten years in which property was not relevant property comprised in the settlement.
• The hypothetical chargeable transfer on which the rate is based aggregates the value of all relevant property in the settlement, the value of related settlements and same-day additions, and the settlor's cumulative chargeable transfers in the seven years before the settlement was made.
• For settlements that commenced before 27 March 1974, related settlement values, same-day additions, and the settlor's personal cumulation are excluded from the calculation, though historic distribution payments may be added instead.

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