Glossary · UK
What is Relevant Property Trust?
A trust (most discretionary and many lifetime trusts) subject to the inheritance tax regime of entry, ten-year periodic and exit charges.
Full Definition
A relevant property trust is the most common type of UK trust for inheritance tax purposes, covering most discretionary trusts and many lifetime interest-in-possession trusts created since 2006. Because no individual beneficiary is treated as owning the assets outright, the property cannot be taxed on a person's death, so a separate IHT regime applies. There are three potential charges: an entry charge (a lifetime transfer above the available nil-rate band of GBP 325,000 is taxed at 20%), a periodic charge on every ten-year anniversary (a maximum of 6% of the value above the nil-rate band), and an exit charge when assets leave the trust. The effective rates are usually well below the headline 40% death rate. This matters because trusts are widely used for estate planning, protecting vulnerable beneficiaries and controlling inheritance, but they carry ongoing reporting and tax obligations. Trustees must register with HMRC and may need to file periodic returns.