Hello IHT forum
Regarding IHT and settler interested relevant property trusts.
The settlor places his PPR on trust, therefore there is a GWR so it is a settlor interested Trust, how does this scenario work for IHT?
So assuming the settlor has a full NRB available any settled property exceeding £325,000 will be CLT at 20% IHT.
If the settlors PPR was valued at £400,000 there would be an immediate £15,000 of CLT IHT due.
The IHT periodic charge is also due every 10years...
1, When the settlor dies is the CLT and Prerodic IHT he has already paid available as a relief on any IHT due above the NRB at that time?
IHT due if he had not made the settlement, (PPR value on death-NRB) x 40% =X
IHT already paid, CLT IHT + Periodic IHT =Y
X-Y=IHT due on the estate?
2, And what about the RNRB if the settlor leaves the property to direct descendants?
If the settlor had not placed PPR on trust he may not have paid any IHT on his home if the value of his PPR on death is below the RNRB+NRB.
Can the Trustees reclaim the CLT IHT and periodic IHT already paid?
I believe the tax system is not as generous as my formulas above
Thanks in advance
Andrew
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