Discretionary Trust 10-Year Anniversary Charge Calculator

The 10-year (periodic) anniversary charge is an inheritance tax charge that arises every 10 years on the anniversary of when a relevant property trust was created. It applies to discretionary trusts, and some other trusts where the assets are 'relevant property' (not held on trust for a fixed beneficiary). The maximum rate is 6% of the chargeable trust value above the nil-rate band.

The maximum rate is 6% of the relevant property above the nil-rate band. This is calculated as 20% (the IHT rate on lifetime transfers) × 30% (the fraction of that rate applicable to periodic charges). If all trust assets are below the nil-rate band, no charge arises.

The trust's available NRB at the 10-year anniversary is reduced by: (1) chargeable transfers made by the settlor in the 7 years before creating the trust, and (2) the value of any related settlements (other trusts created by the same settlor on the same day). The standard NRB is £325,000 (frozen until April 2028).

Yes. If the periodic charge exceeds £nil (i.e. there are chargeable assets above the available NRB), you must complete HMRC form IHT100 (Inheritance Tax Account) within 6 months of the anniversary date. If no charge is due, the trustee still needs to consider whether a return is required.

An exit charge arises when assets leave the trust (are distributed or cease to be relevant property) between 10-year anniversaries. It is calculated as a proportionate fraction of what the 10-year charge would have been, based on how many complete quarters (3-month periods) have elapsed since the last 10-year anniversary. Maximum rate is 6% of the exiting assets' value above NRB.

Yes. Excluded property (e.g. overseas assets of non-UK domiciled settlors — though changing under non-dom reform), assets qualifying for 100% business property relief (BPR), assets qualifying for 100% agricultural property relief (APR), and certain other exemptions can reduce or eliminate the charge. Charities and trusts for bereaved minors are also excluded.

No. The RNRB (£175,000) does not apply to discretionary trusts — it only applies to direct descendants inheriting the family home from the deceased's estate. The trust periodic charge calculation uses only the standard NRB (£325,000).

Trustees should keep: the trust deed, a full asset schedule at each 10-year anniversary, documentation of all distributions (exit charges), the settlor's NI number and details of their 7-year cumulative transfers, and records of any BPR/APR claims. HMRC can request records going back to the trust's establishment date.