HMRC plans to change inheritance tax for trusts
Currently, in order to calculate the amount of any inheritance tax due for a specific period charge, trustees must give the historic value of any other property in a trust which was set up at the same time as the trust concerned. They must also give the historic value of any chargeable transfers made within seven years before the relevant trust was set up.
This complicated endeavour is made even more difficult when the trustee is also expected to submit:
• the current value of the property in trust
• the value of any transfer of relevant property out of the trust during the last ten years, along with dates
• the value of any transfer of relevant property into the trust during the last ten years, along with dates
• the historic value of any property that is not relevant, within the trust
Instead, HMRC has stated in its proposals that any previous lifetime transfers will be ignored, when determining the nil-rate band for transfers on exit charges and 10 year anniversary charges.
It also proposes to ignore non-relevant property, with the nil-rate band being split by the number of relevant property settlements made. Tax will then be charged at a rate of six percent of the chargeable transfer.