Published earlier this week, the HM Revenue & Customs paper, ‘Inheritance tax: Simplification of trust charges – the next stage’, detailed industry responses to a consultation on the subject which was open between May and August this year.
There was widespread support for proposals to align the filing and payment dates for IHT 10 year anniversary and exit charges, with these and the treatment of accumulated income all included as primary legislation in the Finance Bill 2014. Technical consultation on this legislation closes on 4 February 2014.
However, the proposal to introduce a single nil-rate band met with strong opposition. The main reasons for the opposition were first, that it would be an onerous task for trustees to try and gather details of all the trusts the settlor had set up and second, the industry felt the proposals were unfair and amounted to retrospective legislation if applied to existing trusts.
Fiona Morrison, technical marketing specialist at Skandia said: “The HMRC paper has acknowledged the high level of opposition to the proposal to introduce a single nil-rate band across all trusts.
“As a result HMRC has confirmed it will consult further on alternative options and any legislation will be included in the Finance Bill 2015.”
Some alternatives to introduce a single nil rate band were offered by respondents. These included introducing a “pro-rata” system for the nil-rate, having a “de-minimis” set at £1,000, considering trusts established within a seven year period independently and a “grandfathering” for existing trusts.
Given the opposition to the proposal, the Government said it will consult further on the nil-rate band, with the aim of including legislation in the Finance Bill 2015.
