Inheritance Tax Act 1984 section 84

Income applied for charitable purposes

Section 84 provides that where a trust requires part of its income to be applied for charitable purposes, a proportionate share of the settled property itself is treated as held for charitable purposes for inheritance tax.

• Where trust terms require part of the income to be applied for charitable purposes, a corresponding part of the settled property is treated as held for charitable purposes.
• This treatment applies for most of Chapter 3 of Part 3 of the Act, which deals with settlements without interests in possession and certain settlements with interests in possession.
• The rule does not apply to section 78 (conditionally exempt occasions) or section 79 (exemption from the ten-yearly charge).
• The proportion of settled property regarded as charitable mirrors the proportion of income that the trust terms direct towards charitable purposes.