TSEM5800 - Heritage maintenance funds
Background
Trusts that hold funds to pay for the maintenance of historic property are known as heritage maintenance funds (HMFs).
»Ê¹ÚÌåÓýapp historic property, which might include buildings, land or chattels such as furniture and works of art, may be held by individuals, or in a trust.
»Ê¹ÚÌåÓýapp HMF holds other income-generating assets to provide funds for the upkeep of the historic property. How a HMF is taxed depends on various things including whether there is a heritage direction in force - see below.
Inheritance Tax
If the historic property is of sufficient historical significance, it may be ‘approved heritage propertyâ€� and certain Inheritance Tax advantages apply. »Ê¹ÚÌåÓýapp responsibility for deciding whether the historic property is of sufficient historical significance and whether the HMF satisfies certain conditions lies with Trusts & Estates Inheritance Tax Heritage Section, Nottingham. If the relevant provisions apply, that office
- will issue a direction under Paragraph 1, Schedule 4 IHTA 1984
- advise Trusts Technical of the existence of the HMF.
Income Tax
Where the Inheritance Tax Heritage Section have issued a direction, there are special income tax provisions for HMFs in ITA/Part 9,Chapter 10. ITA/Sections 507 to 510 allow us to disapply certain taxing provisions on the settlor and any occupier of the heritage property. ITA/S511 prevents double taxation of the settlor. ITA/Sections 512 to 517 provide for an additional tax charge on the trustees if the HMF does not stick to the rules agreed with Trusts & Estates Inheritance Tax Heritage Section, Nottingham.
If the Inheritance Tax Heritage Section do not issue a direction, the normal trust rules apply for income tax purposes.