What is an accumulation and maintenance trust?
Answered 17 March 2026
An accumulation and maintenance (A&M) trust is a specific type of trust with defined legal conditions, originally carrying significant tax advantages, particularly for IHT — though those advantages were substantially curtailed by Finance Act 2006.
What the law says
Under IHTA 1984, s.71, an accumulation and maintenance trust is settled property where:
- One or more beneficiaries will, on or before attaining a specified age not exceeding 18, become beneficially entitled to the property; and
- No interest in possession subsists in the property, and the income is to be accumulated so far as not applied for the maintenance, education or benefit of a beneficiary.
Additionally, the trust must satisfy one of two further conditions:
- Not more than 25 years have elapsed since the commencement of the settlement (or since the conditions were first satisfied); or
- All beneficiaries are (or were) grandchildren of a common grandparent, or children/widows/widowers/surviving civil partners of such grandchildren who died before becoming entitled.
⚠️ Post-FA 2006 restriction: Section 71 does not apply to settled property at any time on or after 22 March 2006, unless it applied to the property immediately before that date and has applied continuously since. Transfers to A&M trusts no longer qualify as potentially exempt transfers (PETs) if made on or after 22 March 2006.
No IHT charge arises when a beneficiary becomes beneficially entitled to, or to an interest in possession in, the settled property on or before attaining the specified age, or on the death of a beneficiary before attaining that age.
HMRC guidance / practice
HMRC describes an A&M trust as one where the following basic conditions are present:
- There is no interest in possession (i.e., no beneficiary has an immediate and automatic right to the trustees' income after expenses);
- The income must be accumulated unless applied for the maintenance, education or benefit of a beneficiary; and
- One or more beneficiaries must, on or before reaching age 25, become either:
- entitled to the property, or
- entitled to an interest in possession.
Note: HMRC's guidance uses age 25 as the threshold for CGT purposes, whereas the statutory IHT definition in IHTA 1984 s.71 uses age 18.
HMRC notes that "accumulation and maintenance trust" is an inheritance tax term, originating in IHTA 1984 s.71. Normally, beneficiaries have an interest conditional on attaining a specific age not normally exceeding 25, but by that age they must be certain of being entitled to the income arising — i.e., they must have an interest in possession.
HMRC also classifies A&M trusts within the broader category of "accumulation/discretionary trusts" — any trust where trustees can accumulate income or pay it at their discretion.
An A&M trust retains some CGT privileges, but its IHT advantages were removed by FA 2006.
Citation sources
An ‘accumulation and maintenance’ trust has some CGT privileges. (It used also to have IHT advantages until FA 2006 removed them.) The basic conditions are that there is settled property (TSEM1102) where there is no interest in possession the income must be accumulated unless it is applied for the maintenance, education or benefit of a beneficiary within the next bullet one or more beneficiaries must on or before reaching 25 become entitled to the property or entitled to an interest in possessio
Normally beneficiaries have an interest that is conditional on attaining a specific age not normally exceeding 25. But, by that age they must be certain of being entitled to the income arising. In other words, by that age they must have an interest in possession. ‘Accumulation and maintenance trust’ is an inheritance tax term. Section 71 Inheritance Tax Act 1984 has a description of the term.
above. 3 Subject to subsections (4) and (5) below, there shall be a charge to tax under this section— a where settled property ceases to be property to which this section applies, and b in a case in which paragraph (a) above does not apply, where the trustees make a disposition as a result of which the value of settled property to which this section applies is less than it would be but for the disposition. 4 Tax shall not be charged under this section— a on a beneficiary’s becoming beneficially
Before 22 March 2006, to be a potentially exempt transfer (PET) (IHTM04057) a transfer must have been a gift to another individual (IHTM04053), to an accumulation and maintenance trust or to a disabled trust. However, where the gift is made on or after 22 March 2006 only gifts by one individual to another or to a disabled trust will qualify as a PET. There is also a PET where an immediate post-death interest comes to an end on or after 22 March 2006 and the settled property continues to be held
A bare trust or simple trust is one in which each beneficiary has an immediate and absolute title to both capital and income. The beneficiaries of a bare trust have the right to take actual possession of trust property. The beneficiaries of a bare trust should normally return the income and gains on their own personal tax returns and the trustees are not required to make a tax return. The trustees may pay the tax due to HM Revenue & Customs (HMRC) on behalf of a beneficiary, but it is the benefi
We use the term ‘accumulation/discretionary trust’ to describe any trust where the trustees can accumulate income or pay it at their discretion. This includes trusts to accumulate (TSEM1566) trusts where the trustees can pay income at discretion accumulation and maintenance trusts (TSEM1567) some mixed trusts (TSEM1569)