The Chartered Institute of Taxation (CIOT) welcomes the two sets of changes announced by the Government to the new rules on Inheritance Tax and trusts. The Institute does not see these technical changes as any sort of major ‘U turn’ and still has considerable concerns over the new rules. John Whiting, Chairman of the CIOT’s Tax Policy Sub-Committee says: “It is good that the Government have listened to the arguments that we and the other professional bodies have been consistently putting forward since these misguided proposals were announced.
“Many of the anxieties and uncertainties that ordinary people have been experiencing since Budget Day could have been avoided if the Government had consulted on this in advance. People were put in the completely unacceptable position that they did not know the IHT that would affect their estates if they died after 21 March. The changes affecting deaths could have been delayed to allow for proper consultation and we very much hope this mistake will not be repeated.
“Overall we give the changes one and a half cheers – there are things still to be done.”
The CIOT points out that the trusts proposals in the Budget affect four broad areas where trusts are used for practical family planning reasons:
1) Trusts created on the death of the first spouse for a surviving spouse.
2) Accumulation and Maintenance trusts, typically holding property until young people reach age 25.
3) Trusts used to direct where property should go on breakdown of marriage.
4) Self-settlements by vulnerable people and other situations affecting the disabled.
The Government’s announcements help the first and fourth situations and offer some modest amelioration of the second where a parent has died leaving a child.
John Whiting continues: “We now need the Government to show they have listened to all of our arguments about the defects in these proposals, and to make similar changes to the proposals as they affect divorce. They also need to put beyond doubt the impact on life policies where there remain considerable uncertainties.”
There are also technical problems for certain variations of wills that need to be sorted out.
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Notes to Editors
NOTES TO EDITORS
The changes to the rules on Inheritance tax and trusts are contained in Schedule 20 of the Finance Bill that is currently before Parliament. Many proposed amendments have been tabled by the Opposition to address defects pointed out by the CIOT and other bodies. On Thursday 8 June, the Government tabled some amendments of their own. The proposals are due to be debated in the Commons Committee on Tuesday 13 June.