Inheritance Tax Act 1984 section 71E

Charge to tax on property to which section 71D applies

Section 71E sets out when an inheritance tax charge arises on property held in an age 18-to-25 trust, and the circumstances in which no charge applies.

• A tax charge arises when property leaves an age 18-to-25 trust or the trustees make a disposition that reduces its value
• No charge applies where the beneficiary becomes absolutely entitled at or before age 18, dies under 18, the property moves into a bereaved minors trust, or payments are made for the beneficiary's advancement or benefit at or before age 18 (or on reaching 18)
• Payments of trust costs and expenses, income payments, arm's length transactions, and amounts within the annual limit paid for purposes other than the beneficiary's benefit are also exempt from the charge
• Trustees who deliberately fail to exercise a right are treated as having made a disposition, triggering a potential tax charge