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HMRC considers splitting IHT nil-rate band across trusts
It has come to light that HMRC has amended its proposal to split an individual’s inheritance tax (IHT) nil-rate band (NRB) across trusts.
The revised plans, which could come into force in 2015, mean that an individual would only have a £325,000 allowance to be divided between multiple trusts. However anyone considering setting up a trust or trustees themselves should also ensure they do not incur penalties if tax-free allowances are miscalculated.
The Government wants to ensure that there’s consistency between people who transfer assets when they die and those who make transfers via trusts whilst they’re still alive.
The government also believes there should be one nil-rate band available for those people who are settling property into trust. This is in-line with the existing one nil-rate band for individuals who transfer assets when they die.
Unfortunately this may mean that more people will be forced into paying inheritance tax, particularly as some UK regions have seen dramatic increases in property values when the inheritance tax threshold has only increased marginally.
There’s also a fear that the planned limit of trusts will drive people to live overseas and entice people to invest in offshore bonds. It may also enable relatives to access assets for those who are too young for wealth responsibilities.
Anna Molter, Associate Solicitor said; “Estate Planning can help to mitigate inheritance tax and long-term care fees in the future. We can provide you with advice in respect of the preparation of bespoke Wills, trusts, Lasting Powers of Attorney and Court of Protection matters”.
If you need legal advice on inheritance tax and how best to mitigate this, call our Wills and probate solicitors in Bristol on 0117 325 2929 or complete our on-line enquiry form.