The same day additions rule for trusts

Where a settlor adds value to two or more relevant property trusts on the same day, the same day additions rule in sections 62A to 62C of the Inheritance Tax Act 1984 brings the value added to each other trust into the rate calculation for the ten year and exit charges on each one. The rule was introduced by Finance (No. 2) Act 2015 and stopped pilot trust planning, in which several small trusts created on different days were each topped up on the same day, often by will, so that each enjoyed its own nil rate band.

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What problem was the rule aimed at?

The rate of tax on a relevant property trust depends on a notional transfer that includes the trust’s own value and the value of any related settlements. Under section 62 two settlements are related only if they have the same settlor and commenced on the same day. A settlor who created separate trusts on different days could therefore keep them apart for rate purposes.

HMRC’s own illustration in IHTM42233 shows the plan. Fred wants to put £450,000 into three relevant property trusts. He creates three pilot trusts with £10 each on different days, then on a single later day transfers £149,990 into each. Because transfers made on the same day are ignored in working out the settlor’s previous chargeable transfers, his cumulative total is only £10, £20 or £30 when each addition is made, so each trust has a full nil rate band. With the nil rate band at £325,000, that structure could keep each trust’s rate at nil for years.

The ten year and exit charge mechanics themselves are covered in the ten year charge on relevant property trusts and exit charges when property leaves a trust.

What counts as a same day addition?

Section 62A(1) sets out the test. There is a same day addition for settlement A where:

a person makes a transfer of value that increases the value of the property in settlement A;
as a result of the same transfer, or another transfer by that person on the same day, the value of the property in settlement B increases;
that person is the settlor of both settlements; and
each settlement contained some relevant property at some point between its commencement and immediately after the addition.

Several features widen the net. The rule looks at increases in value, not just new assets, so forgiving a loan made to the trustees can be an addition (IHTM42233). The transfer that first funds a trust counts, unless the two trusts are related (section 62A(4)). It does not matter whether the transfer is chargeable, exempt or relieved for Inheritance Tax, only that it is a transfer of value (IHTM42233). A trust that has only ever been, for example, a qualifying interest in possession trust is outside the rule because it never held relevant property.

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What are the exceptions?

Section 62B(1) removes an addition from the rule if any of these apply:

immediately after the transfer, all the property in either trust is held for charitable purposes only without limit of time;
either trust is a protected settlement under section 62C;
the transfer results from, or funds, a regular premium on a life insurance contract with premiums due at intervals of a year or less.

There is also a £5,000 threshold. Section 62B(2) to (4) say that, unless the transfer is the transfer on the settlor’s death, there is a same day addition only if the value added to settlement A exceeds £5,000 and the value added to settlement B exceeds £5,000, with multiple same day transfers to one trust added together. The threshold does not apply to additions made by the settlor’s will.

A protected settlement is one that commenced before 10 December 2014 and either has received no transfers of value from the settlor on or after that date, or received an addition on the settlor’s death before 6 April 2017 under will provisions that were in substance the same as immediately before 10 December 2014 (section 62C). That window for unchanged wills has now closed.

How does a same day addition change the charges?

For a ten year anniversary, section 66(4)(d) and (e) add to the notional transfer the value of any same day addition and, where the other settlement is not related, the value of the relevant property in that other settlement immediately after it commenced. Section 68(5)(e) and (f) do the same for exit charges before the first ten year anniversary. Exits between anniversaries use the rate from the last anniversary, so the effect carries through (IHTM42233).

The rules apply to charges arising on or after 18 November 2015 and to additions made on or after 10 December 2014 (IHTM42233). They change only the rate. The value actually taxed on each trust is still its own relevant property.

How does HMRC’s example work?

In IHTM42235 Amy created two small relevant property trusts in August 2012, on different days, with £100 each. She died in September 2018 and her will left £324,900 to each trust, with the residue to her husband. In October 2021 the trustees of trust A make a distribution.

Values used for the rate on trust A	Before the rule	With the rule
Trust A at commencement	£100	£100
Addition to trust A on death	£324,900	£324,900
Same day addition to trust B	Ignored	£324,900
Trust B at commencement	Ignored	£100
Total	£325,000	£650,000

Before the rule the total did not exceed £325,000 and the rate was nil. With it HMRC puts the effective rate at 3%, the same result as if the will had created one trust of £650,000. Because both additions arose from the death transfer, the £5,000 threshold could not help. If the residue had gone onto an immediate post death interest trust, that trust would not count because it never held relevant property.

Why does this limit pilot trust planning?

Many pilot trust plans relied on the settlor’s will to fund several trusts at once. Every gift made by a will takes effect through the single transfer on death, so additions to two or more relevant property trusts by the same will are same day additions unless an exception applies. The rule does not bite where a trust is a protected settlement, where one of the trusts has never held relevant property, or, for lifetime gifts, where the additions are made on different days or one of them is £5,000 or less (sections 62A and 62B).

Lifetime additions on different days avoid section 62A, but they do not escape aggregation altogether. Each chargeable addition enters the settlor’s cumulative total, and under section 67 a later addition to an older trust makes the trust use the settlor’s chargeable transfers in the seven years before that addition, if higher than the total at commencement (IHTM42090). For a comparison of will trust structures, see nil rate band discretionary will trusts.

What admin points arise for pilot trusts?

Pilot trusts holding £100 or less that existed before 6 October 2020 are excluded from the Trust Registration Service, but they must register once added funds take them above £100 (TRSM23090). Trustees may also be excused from delivering an Inheritance Tax account for a pilot trust that has only ever held cash not exceeding £1,000, has had no further property from the settlor, has UK resident trustees and has no related settlements (IHTM06122). Once a will tops a pilot trust up, both exclusions usually fall away; see the Trust Registration Service.

What mistakes come up most often?

Looking only at related settlements and missing trusts created on other days that were funded on the same day.
Applying the £5,000 threshold to additions made by will.
Treating a loan waiver to trustees as outside the rule because no new assets moved.
Assuming a pre 2014 trust is protected after the settlor has added to it in lifetime.
Forgetting the commencement values of the other trust, which section 66(4)(e) and 68(5)(f) also bring in.
Not keeping a record of every trust a settlor has created and every addition, which the trustees need for every ten year and exit charge.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 24 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.