Section 124K — Inheritance Tax Act 1984: 100% trust relief allowance (age 18-to-25 trusts)

100% trust relief allowance (age 18-to-25 trusts) 124K 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 section 71E(1)(a) (charge on age 18-to-25 trusts) in relation to a settlement (“the relevant settlement”) and a beneficiary of that settlement (“ B ”) for the purposes of—

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

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

2 There is no 100% trust relief allowance available in relation to an occasion on which tax is charged under section 71E(1)(b).

3 The 100% trust relief allowance available in relation to an occasion on which tax is charged under section 71E(1)(a) (“the relevant occasion”) in relation to the relevant settlement and B is equal to—

a the 18-25 trust allowance in relation to the relevant settlement and B, less, b the total amount by which the values charged on occasions on which tax was charged under that section in relation to the relevant settlement and B before the day on which the relevant occasion occurred were treated as reduced as a result of section 104(1B) or 116(1B).

4 The 18-to-25 trust allowance in relation to the relevant settlement and B is—

a where there is only one qualifying settlement, £2.5 million, or b where there is more than one qualifying settlement, £2.5 million divided by the number of qualifying settlements.

5 For the purposes of subsection (4), a settlement is a qualifying settlement—

a if it is the relevant settlement, or b where the relevant settlement was made by a parent of B on their death on or after 30 October 2024, if it is another settlement—

i of which B is a beneficiary, ii to which section 71D applies, and iii that was made by the same parent of B on their death.

6 But where—

a more than one conditionally relievable occasion in relation to the relevant settlement and B 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 (7) (instead of under subsection (3)).

7 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.

8 For the purposes of this section—

a a “ conditionally relievable occasion ”, in relation to the relevant settlement and B, means an occasion—

i on which tax is charged under section 71E(1)(a) (charge on age 18-to-25 trusts) in relation to the settlement and B, 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 the settlement and B, b the potentially relievable value, in relation to an occasion on which tax is charged under section 71E(1)(a) in relation to the relevant settlement and B, 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 “ parent ” has the meaning given by section 71H.