STEP Tax Trusts & Estates (E&W) Practice Questions - STEP Advanced Certificate in Taxation of Trusts and Estates - England and Wales Exam - STEP Tax Trusts & Estates (E&W) Practice Questions - STEP Advanced Certificate in Taxation of Trusts and Estates

Question 1

A discretionary trust created in 2014 holds relevant property with an unencumbered market value of £500,000 at its first 10-year anniversary in 2024. The settlor made no lifetime chargeable transfers prior to creating the trust, and no additions have been made. Assuming the nil rate band is £325,000, what is the effective 10-year principal charge rate before multiplying by 30%?

7.00% 20.00% 3.50% 6.00%

Correct Answer:

7.00%

Question 2

What is the maximum actual tax rate payable on the value of relevant property at a 10-year anniversary of a discretionary trust?

20.0% 6.0% 40.0% 3.0%

Correct Answer:

6.0%

Question 3

Capital is distributed from a discretionary trust 4 years (16 complete quarters) after the trust was established. No previous distributions or 10-year charges have occurred. If the initial tax rate determined at setup was 4.0%, what fraction multiplier is applied to that rate to calculate the exit charge?

16/40 4/10 16/100 4/40

Correct Answer:

16/40

Question 4

Which of the following distributions from a discretionary trust is completely exempt from an IHT exit charge under s.65(4) IHTA 1984?

A distribution of capital made within 3 months of creating the trust A distribution of capital made 5 years after creating the trust A distribution of capital made 6 months before the 10-year anniversary A distribution of capital to a non-spouse beneficiary after 8 years

Correct Answer:

A distribution of capital made within 3 months of creating the trust

Question 5

When calculating the available nil rate band for a discretionary trust's 10-year anniversary charge, which transfers made by the settlor must be deducted from the standard £325,000 nil rate band?

Chargeable lifetime transfers (CLTs) made by the settlor in the 7 years prior to creating the trust Potentially exempt transfers (PETs) made by the settlor 3 years after creating the trust Exempt spousal transfers made by the settlor 10 years before creating the trust Annual exemption transfers of £3,000 made by the settlor in the current year

Correct Answer:

Chargeable lifetime transfers (CLTs) made by the settlor in the 7 years prior to creating the trust

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About this Exam

Prepare with the STEP Tax Trusts & Estates (E&W) Practice Questions - STEP Advanced Certificate in Taxation of Trusts and Estates - England and Wales Exam practice quiz. This question bank includes 100 questions covering trust, year, property, rate, and discretionary. Use it to review important concepts, identify knowledge gaps, and build confidence for the related exam, course, or assessment.

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STEP Tax Trusts & Estates (E&W) Practice Questions - STEP Advanced Certificate in Taxation of Trusts and Estates - England and Wales Exam

This practice set contains 100 questions from the matching question bank and focuses on trust, year, property, rate, and discretionary. Work through each question carefully, review the provided solutions, and revisit topics that need more study before your next attempt.

This is an independent study resource intended for practice and review; it is not an official examination or an endorsement by any organization named in the title.

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STEP Tax Trusts & Estates (E&W) Practice Questions - STEP Advanced Certificate in Taxation of Trusts and Estates - England and Wales Exam

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