Exit charge is a charge on trustees of a relevant property trust when an exit arises. Exit charge arises usually on distribution of capital to a beneficiary, termination of the trust and distribution of the whole fund and when a property no longer qualifies as a relevant property. This document discusses the basis of exit charge calculation, and the proforma. It also covers exit charge rules on BPR and APR, exceptions from an exit charge.

When trust property ceases to be relevant property, it becomes subject to a charge to inheritance tax. This charge is known as either:

  • the exit charge
  • the proportionate charge

IHTA 1984, s 65

This guidance note explains how to work out the amount of tax payable when an exit charge arises. It ap-plies to occasions of charge which arise on or after 18 November 2015, which was the date of Royal Assent of the second Finance Act of 2015. F(No 2)A 2015 amended the rules for calculating the exit charge. The former method of calculation is outlined in the Calculation of exit charge before 18 November 2015 guid-ance note with a summary of the changes given below.

See the Relevant property guidance note for an explanation of what relevant property is.

This note should be read in conjunction with the Principal (10 year) charge guidance note. The comments made in that note on obtaining valuations are just as pertinent to the calculation of the exit charge.

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