Principal or the 10-year charge is a charge on trustees of a relevant property trust on each tenth anniversary after the trust was created. This document discusses the basis of principal charge calculation, elements of the principal charge calculation, and the proforma. It also covers rules on same day addition and treatment of undistributed income.

Trustees of a relevant property trust are charged to inheritance tax on each tenth anniversary after the trust was created. This charge is known as any of the following:

  • the  principal charge
  • the  periodic charge
  • the  10 year charge
  • the  decennial charge

IHTA 1984, s 64(1)

This guidance note explains how to work out the amount of tax payable. It applies to occasions of charge 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 principal charge. The former rules are outlined in the Calculation of principal (10 year) charge before 18 November 2015 guidance note.

See the Relevant property guidance note for an explanation of what relevant property is and how the date of the anniversary is determined.

The calculation of periodic and exit charges on relevant property has long been recognised as problematic. Not only is the calculation itself complex but it can be difficult to find out all the information required.

Access this article and thousands of others like it free for 7 days
with a trial of TolleyGuidance.

ACCESS THE FULL ARTICLE

Already a subscriber? Login

Request a Free Trial to TolleyGuidance to gain access to the full article

TolleyGuidance is produced by specialists within the field, our tax guidance materials provide actionable insights and practical guidance to support you day-to-day. We don’t just inform you about the latest changes in the tax world. We take the time to explain the implications and, most importantly, what actions you need to take for your clients.


A bit about you:

Please note that all fields marked with a * must be filled in
Salutation
First name*
Last name*
Company*
Job title*
Email*
Phone*
Postcode