Section 124J — Inheritance Tax Act 1984: 100% trust relief allowance (special trusts)

100% trust relief allowance (special trusts) 124J 1 This section applies for the purpose of determining the amount of the 100% trust relief allowance available in relation to an occasion on which tax is charged under a special trust charging provision for the purposes of—

a section 104(1B) (business property relief),

and b section 116(1B) (agricultural property relief).

2 The 100% trust relief allowance available in relation to an occasion on which tax is charged under a special trust charging provision (“the relevant occasion”) in relation to a settlement (“the relevant settlement”) is equal to—

a £2.5 million, less, b the total amount by which the values charged on occasions on which tax was charged under that special trust charging provision in relation to the relevant settlement before the day on which the relevant occasion occurred were treated as reduced as a result of section 104(1B) or 116(1B).

3 But where—

a more than one conditionally relievable occasion in relation to the relevant settlement and that special trust charging provision occurs on the same day, and b the sum of the potentially relievable values in relation to those occasions exceeds the amount of the 100% trust relief allowance that would have been available in relation to a conditionally relievable occasion occurring on that same day, if no other such occasion had occurred on that day, the 100% trust relief allowance available in relation to those occasions is to be determined under subsection (4) (instead of under subsection (2)).

4 The 100% trust relief allowance available in relation to each of those occasions is the amount given by multiplying—

a the amount given by dividing the potentially relievable value in relation to that occasion by the sum of the potentially relievable values in relation to each of those occasions, by b the amount of the 100% trust relief allowance that would have been available in relation to a conditionally relievable occasion occurring on that same day, if no other such occasion had occurred on that day.

5 For the purposes of this section—

a a “ conditionally relievable occasion ”, in relation to the relevant settlement and a special trust charging provision, means an occasion—

i on which tax is charged under that provision, and ii on which section 104(1B) or 116(1B) would apply to reduce the value charged if there were an amount of the 100% trust relief allowance available in relation to it, b the potentially relievable value, in relation to an occasion on which tax is charged under a special trust charging provision, is so much of the value as otherwise would have been charged on that occasion as would be treated as reduced as a result of section 104(1B) or 116(1B) if the 100% trust relief allowance available in relation to it were unlimited, and c a special trust charging provision means—

i section 70 (property leaving temporary charitable trusts),

ii section 71 (accumulation and maintenance trusts), iii section 71B (trusts for bereaved minors),

iv section 72 (property leaving employee trusts and newspaper trusts),

v section 73 (pre-1978 protective trusts),

vi section 74 (pre-1981 trusts for disabled persons), or vii paragraph 8 of Schedule 4 (maintenance funds for historic buildings).