08 July 2013

Proposals have been put forward by HMRC to simplify the inheritance tax charges on trusts.

  • In calculating 10 year anniversary and exit charges, a settlor's previous lifetime chargeable transfers (and non-relevant property) are ignored, but his nil rate band is shared between the number of settlements established.
  • There would be a flat rate 6% charge for all ten year anniversary and exit charges.
  • The treatment of accumulated income would be standardised.
  • Filing and payment dates for ten-year anniversary and exit charges would be aligned with self-assessment.

The new rules would apply to all existing trusts from a given date (as yet unspecified).

The proposals show that the Government recognises that the current regime often means complicated and time consuming calculations which, for smaller trusts, are often disproportionate compared to the tax at stake. They aim to simplify the calculations and reduce the burden for trustees, but at the same time protect inheritance tax revenues.

If you would like any further information on this subject, please contact Tom Hewitt.

Key contact

Tom Hewitt

Tom Hewitt Partner

  • Private Wealth
  • Head of Estates and Land
  • Head of Food and Farming

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