Paragraph 5 100% trust relief allowance

After section 124F (as inserted by paragraph 4) insert—

“100% trust relief allowance (relevant property)

124G

(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 64 or 65 in relation to a settlement (“the relevant settlement”) 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 section 64 or 65 (“the relevant occasion”) in relation to the relevant settlement is equal to—

(a)

the trust maximum allowance (see sections 124H and 124I) for the relevant occasion, less

(b)

the total amount by which the values charged on occasions on which tax was charged under section 64 or 65 in relation to the relevant settlement in the allowance period were treated as reduced as a result of section 104(1B) or 116(1B).

(3)

The allowance period means the period—

(a)

beginning with—

(i)

the first day of the second quarter in the period beginning with the date of the most recent ten-year anniversary (within the meaning of Chapter 3 of Part 3) of the relevant settlement, or

(ii)

if there has not yet been a ten-year anniversary of the relevant settlement, the first day of the second quarter in the period beginning with the date on which the settlement commenced, and

(b)

ending with the day before the relevant occasion occurred.

(4)

But where—

(a)

more than one conditionally relievable occasion 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 (5) (instead of under subsection (2)).

(5)

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.

(6)

For the purposes of this section—

(a)

a “conditionally relievable occasion” means an occasion on which—

(i)

tax is charged under section 64 or 65 in relation to the relevant settlement, and

(ii)

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, and

(b)

the potentially relievable value, in relation to an occasion on which tax is charged under section 64 or 65, 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.

Trust maximum allowance

124H

(1)

The trust maximum allowance for an occasion on which tax is chargeable under section 64 or 65 in relation to a settlement (“the relevant settlement”), other than a qualifying pre-commencement settlement (within the meaning of section 124I), is the sum of transferred allowance amounts the relevant settlement has acquired.

(2)

The relevant settlement acquires a transferred allowance amount if—

(a)

there is a chargeable transfer of qualifying relievable property that results in the property becoming comprised in the relevant settlement, or

(b)

tax is charged as if there was a transfer of value of qualifying relievable property comprised in the relevant settlement as a result of section 4(1) (transfers on death) or section 52(1) (charge on termination of interest in possession).

(3)

The transferred allowance amount in relation to a transfer (or deemed transfer) is equal to so much of the value of the qualifying relievable property as does not exceed the maximum allowance cap in relation to it (and if the cap is nil or less, no transferred allowance amount is acquired).

(4)

The maximum allowance cap in relation to qualifying relievable property is equal to—

(a)

£2.5 million, less

(b)

the sum of transferred allowance amounts previously acquired by—

(i)

the relevant settlement, or

(ii)

any other settlement made by the settlor of the relevant settlement.

(5)

But where more than one transfer referred to in subsection (2)(a) or (b), occurs (or is deemed to occur for the purpose of charging tax) on the same day, the maximum allowance cap is allocated between the qualifying relievable property that is the subject of each transfer in proportion to their value.

(6)

Property is qualifying relievable property to the extent that on its transfer (or deemed transfer)—

(a)

it becomes relevant property, and

(b)

the value of the transfer is treated as reduced as a result of section 104(1A) or 116(1A).

(7)

For the purposes of this section, the value of qualifying relievable property is equal to so much of the amount of the value transferred on its transfer (or deemed transfer) as is treated as reduced as a result of section 104(1A) or 116(1A).

(8)

The determination of whether property is qualifying relievable property, and its value, is to be made as it would be made at the time of the transfer (and accordingly ignoring the occurrence of any subsequent events).

(9)

In this section and in section 124I “relevant property” has the meaning it has in Chapter 3 of Part 3 (see section 58).

Trust maximum allowance (qualifying pre-commencement settlements)

124I

(1)

The trust maximum allowance for an occasion on which tax is chargeable under section 64 or 65 in relation to a qualifying pre-commencement settlement is £2.5 million.

(2)

A settlement is a qualifying pre-commencement settlement if—

(a)

the settlement commenced before 30 October 2024, and

(b)

had there been an occasion on which tax is chargeable under Chapter 3 of Part 3 (apart from section 79), immediately before that date in relation to all of the property comprised in the settlement, at least some of the amount on which tax would then be chargeable would be treated as reduced as a result of subsection (1B) of section 104 or 116 if—

(i)

the amendments made to those sections by paragraphs 2, 3 and 12 of Schedule 12 to the Finance Act 2026 had been in force,

(ii)

sections 106, 117 and 123 (minimum periods of ownership or occupation) were ignored,

(iii)

all of the property had been relevant property, and

(iv)

there were an amount of the 100% trust relief allowance available in relation to it.

(3)

The condition in subsection (2)(b) is to be treated as met if—

(a)

some or all of the property comprised in the settlement is agricultural property let on a tenancy beginning before 1st September 1995,

(b)

the transferor’s interest condition in section 116(2) was not met in relation to that property immediately before 30 October 2024, and

(c)

the condition in subsection (2)(b) of this section would have been met if the transferor’s interest condition had been met in relation to that property at that time.

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).

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.”