Capital Acquisitions Tax Consolidation Act 2003 section 15

Acquisitions by discretionary trusts

Section 15 imposes a once-off 6% inheritance tax charge on property that becomes subject to a discretionary trust, treating the trust and its trustees as having taken an inheritance on the latest of three specified dates.

• When property becomes subject to a discretionary trust on or after 25 January 1984, the trust is deemed to take an inheritance of an absolute interest in that property, chargeable at 6%.
• The charge arises on the latest of three dates: the date the property entered the trust, the date of the disponer's death, or the date on which the youngest principal object reaches age 21 (or age 25 if the property entered the trust before 31 January 1993).
• Certain interests — future interests (interests in expectancy) and interests in life assurance policies — are not treated as trust property until they come into possession or are converted into property that is not a future interest.
• Where the same property in the same trust would otherwise be charged more than once under the same disposition, only the earliest charge applies — ensuring the once-off nature of the tax.