Brown batters trusts again
IHT tax breaks for hundreds of thousands under threat as HMRC tribunal body turns down appeal
Thousands of families face the prospect of being hit by a new inheritance tax
blow after a key ruling by the
Special
Commissioners.
The tribunal body judged that a family which had opened a discretionary will
trust would be liable for a £60,000 IHT bill on the mother’s £150,000 half-share
of the property, on the grounds that she had not worked, had not contributed to
the mortgage and had died first.
Discretionary will trusts aim to ease the inheritance tax burden by splitting
the value of a property between a husband and wife but the decision has sparked
concerns that hundreds of thousands of families’ plans to avoid the IHT
millstone will be scuppered.
‘The ruling devalues the contribution that the wife has
made,’ Grant
Thornton’s senior tax partner Mike Warburton told
The Daily Telegraph.
Warburton added: ‘HM Revenue & Customs is saying that if you try to save
inheritance tax by setting up a nil-rate band discretionary trust in this way,
it is only going to work as long as the person who dies first has contributed
the cash.’
Further reading:
HMRC clarifies reach of new IHT charge
Halifax Bank wants IHT threshold raised to
?460,000
Raise revenue from CGT, says IoD