Budget 2015 – IHT / Trusts

Deeds of variation

The government have announced that there will be review of the use of deeds of variation for tax purposes.  Currently a deed of variation can be made within 2 years of the date of death to effectively re-write the Will of the deceased.  This can be beneficial in moving assets around the family to obtain maximum relief from Inheritance Tax in circumstances where the original Will has not been drafted in a tax efficient way because the Will is old and has not been updated to take advantage of changes in Inheritance Tax rules.

 

Trusts

As previously announced, following consultation, the government will not introduce a single settlement nil rate band, although it will introduce new rules to target avoidance through the use of multiple trusts (pilot trusts).

Legislation was published in draft on 10 December 2014. This will be legislated in a future Finance bill. Following consultation on the draft legislation, the government has made changes to the legislation so that the new rules apply only when property is added to more than one relevant property trust on the same day.  The revised legislation provides that where the value of the addition is £5,000 or less there will not be a same day addition. The period of grace for not applying the new rules for additions to existing trusts to a will executed before 10 December 2014 has been extended by 12 months. The exclusion will now be limited to deaths before 6 April 2017.

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Nov 20

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