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HMRC have published a third consultation document on simplifying the inheritance tax (IHT) treatment of relevant property trust charges.
The document’s proposals aim to prevent taxpayers reducing their IHT liabilities by setting up multiple trusts for their heirs, each with a £325,000 tax-free allowance.
HMRC have published a third consultation document on simplifying the inheritance tax (IHT) treatment of relevant property trust charges.
The document’s proposals aim to prevent taxpayers reducing their IHT liabilities by setting up multiple trusts for their heirs, each with a £325,000 tax-free allowance.
The Revenue suggests a revised model for applying a nil-rate band available to relevant property trusts. It is based on a statutory requirement that the settlor must make an election to set out how he or she wishes a “settlement nil-rate band” to be allocated between all settlements he/she has made.
The change would shift the administrative burden away from the trustees and give them “certainty they need when calculating trust charges”, according to the tax department.
Trustees would be required to “self assess” the tax due through a change in the IHT 100 form to include a “tax due” box at the end.
HMRC hope to introduce a standard rate of 6% in respect of ten-year and exit charges, on the basis it will make it easier for trustees to manage calculations.
The new measures would take effect from 6 April 2015 but would apply to any settlement established after 6 June 2014 and to any property added to trusts after the same date.
Responses to the consultation should emailed no later than 29 August.
