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ARCHIVED: This Practice Note has been archived and is not maintained.

An accumulation and Maintenance (A&M) Settlement was a particular type of non-Interest in possession (IIP) settlement, intended to make provision for children and young adults up to the age of 25. A&M settlements enjoyed privileged inheritance tax (IHT) treatment between 1975 and 2006. This privileged treatment was stopped as part of the widespread changes to the taxation of Trusts introduced by Finance Act 2006 (FA 2006) (see Practice Note: Finance Act 2006 changes to trust taxation [Archived]). At the same time, transitional provisions were introduced for pre-22 March 2006 A&M settlements, which allowed for a certain amount of restructuring prior to 6 April 2008.

This Practice Note looks at the taxation of A&M trusts, both historically and under the post-22 March 2006 rules. Although new A&M settlements cannot be created, practitioners need to be aware of the rules because they will still deal with trusts which were created before 2006. Typically, an A&M trust had several beneficiaries of different ages. The shares of the