HMRC’s consultation on new trust charges

1st September 2014
Posted in Articles, Featured Articles, Inheritance Tax, Trusts and Estates, Private Client, Trusts and Estates by

HMRC have proposed various changes which they suggest will help to “simplify and make fairer” the calculation of trust charges. This includes entry, exit and 10 year charges including how the nil rate band is included in these calculations. There have been a number of consultation documents issued and responses published.

The most recent consultation document was published in June 2014 and runs until the end of this month. In the document HMRC are proposing:

  • Each Settlor will have a “Settlement” nil rate band (“SNRB”). This will be separate from and unconnected with their own personal nil rate band. The Settlor can decide how their SNRB is allocated between Settlements they created.   This is not as favourable to the current situation where each trust has its own nil rate band.
  • The SNRB will be in-line with the current nil rate band amount.
  • There will be anti-forestalling provisions so that the new legislation  will have effect for calculations from 6 April 2015 but will only apply to new settlements created after 6 June 2014 (including additions to existing settlements after this date). This is beneficial as it confirms that HMRC will not impose the new rules retrospectively to existing trusts which had been feared.

The consultation process is still ongoing and therefore the precise outcome of the proposals is unclear. Further information will be available in the Autumn when the responses to the current consultation document will be published.

 

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