Inheritance Tax Act 1984 section 71

Accumulation and maintenance trusts

Section 71 provides special inheritance tax treatment for accumulation and maintenance trusts, where property is held for beneficiaries who will become entitled to it at or before a specified age, with income accumulated or used for their maintenance, education or benefit in the meantime.

• The section applies only to trusts that qualified before 22 March 2006 and have continued to meet the conditions since; no new accumulation and maintenance trusts can benefit from this treatment after that date.
• The trust must meet two core conditions: the beneficiaries must become entitled to the property at or before a specified age (originally not exceeding 25, reduced to 18 from 6 April 2008 for continuing trusts), and income must be accumulated except where applied for beneficiaries' maintenance, education or benefit.
• A tax charge arises if property leaves the trust or if the trustees make a disposition that reduces the value of the settled property, but no charge applies when a beneficiary becomes entitled on or before the specified age or dies before reaching it.
• The trust must not have been in existence for more than 25 years (unless all beneficiaries are grandchildren of a common grandparent or their children, widows, widowers or surviving civil partners), and the definition of children includes illegitimate, adopted and stepchildren.