Inheritance Tax Act 1984 section 71G

Calculation of tax charged under section 71E in all other cases

Section 71G sets out how to calculate the inheritance tax charge on age 18-to-25 trust property where the chargeable event occurs before the beneficiary reaches age 18 (i.e. cases not covered by the section 71F calculation method).

• This section applies where a tax charge arises under section 71E on age 18-to-25 trust property but the calculation rules in section 71F do not apply — broadly, where the chargeable event occurs before the beneficiary turns 18.
• The amount on which tax is charged is the loss in value to the settled property caused by the chargeable event; alternatively, where the tax itself is paid out of the settled property, the chargeable amount is grossed up so that, after deducting the tax, the net figure equals that loss in value.
• The tax rate is determined by applying the rate calculation mechanism used for temporary charitable trusts under section 70(6)–(8), but with references adjusted so that they refer to age 18-to-25 trust property and the section 71E charge rather than to temporary charitable trusts.
• Where property moved from an old-style accumulation and maintenance trust into an age 18-to-25 trust, the period it spent in the accumulation and maintenance trust is included by treating it as having become age 18-to-25 trust property at the time it first entered the accumulation and maintenance trust — ensuring the full duration is reflected in the rate calculation.