I have a discretionary trust set up in 2014 (5 years ago). The initial value was £600,000. The trustees now wish to appoint out all the assets, 50% to charities and 50% to individual beneficiaries. I am a bit confused how to calculate the IHT exit charge. I know there is no exit charge for the charity under IHTA 1984 s76. But how do I calculate the effective rate? Is it £600,000 less £300,000 (charity exemption), so the relevant property is £300,000 less nil rate band £325,000, so the effective rate is 0%. Or is it £600,000 less nil rate band £325,000= £275,000. IHT 20%, effective rate 30% x 20/40 quarters = 1.375%. So non-charitable beneficiaries = £300,000 x 1.375% = £4125; whilst charity is £300,000 less charity exemption £300,000= £0 x 1.375% = £0 IHT.
Thanks in advance.
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