Institutes unite on trusts
Representatives of several professions join up to call for delays to trust moves announced in the Budget
An alliance of major institutes across several professions has united to call
for a delay in the government clampdown on trusts.
In what is thought to be an unprecedented alliance, representatives of the
Society of Trust and Estate Practitioners (STEP), the Chartered Institute of
Taxation (CIOT), the Law Society of England & Wales and the Law Society of
Scotland, the Low Incomes Tax Reform Group, the Institute of Chartered
Accountants in England & Wales (ICAEW), the Institute of Chartered
Accountants of Scotland, the Association of Chartered Certified Accountants
(ACCA) and the Association of Private Client Investment Managers (APCIMS) have
all issued a joint release highlighting problems with the plans.
The move in the budget to align the IHT treatment of trusts, applying new tax
charges to accumulation and maintenance trusts and others, have caused
widespread uproar as professionals concerned with the vehicles highlight huge
unintended effects.
John Riches, STEP’s technical committee chairman, highlighted another problem
in the release today: ‘If you die without making a will and you have children,
the statutory rules on intestacy can mean that a trust is automatically set up
for your family. This means if someone dies leaving a house in their own name
worth £500,000, their family may now have an extra tax bill of £36,000 compared
with nil before Budget day.’
Emma Chamberlain of the Chartered Institute of Taxation (CIOT) said: ‘It is
perfectly right and proper that the government acts to stop unacceptable tax
avoidance through use of trusts. However all the professional bodies hope that
HMRC and the government will listen to our representations and modify the
proposals to ensure that spouses and civil partners remain exempt and that young
and vulnerable people can continue to be protected through trusts without
suffering a financial penalty.’
The presence of the Low Incomes Tax Reform Group on the list of bodies will
add particular pressure to government on the issue, which has tried to maintain
that the move will only affect the very well-off trying to avoid tax.