Inheritance Tax Act 1984 section 71D

Age 18-to-25 trusts

Section 71D provides a favourable inheritance tax treatment for property held in trust for a young person aged under 25 who has lost at least one parent, where the trust was set up through the deceased parent's will, a criminal injuries compensation scheme, or an overseas terrorism compensation scheme, and where the beneficiary will become absolutely entitled to the trust property at age 25.

• The trust must be for the benefit of a person under 25 who has lost at least one parent, and must have been established by the deceased parent's will, the Criminal Injuries Compensation Scheme, or the Victims of Overseas Terrorism Compensation Scheme
• The beneficiary must become absolutely entitled to the trust property, its income, and any accumulated income on reaching age 25, and until then all distributions of capital or income must be for that beneficiary's benefit
• The section also covers property that ceased to qualify as an accumulation and maintenance trust under the old section 71 rules between 22 March 2006 and 6 April 2008, provided it immediately moved into a trust meeting the section 71D conditions
• Trustees may apply small amounts for the benefit of persons other than the beneficiary without disqualifying the trust, subject to an annual limit of the lower of £3,000 or 3% of the maximum value of the settled property in the relevant year