Govt slammed over tax changes to trusts

Govt slammed over tax changes to trusts

Lords’ reports examines Finance Bill

The influential House of Lords Economic Affairs Committee has criticised the
government over the way it handled some of the anti-avoidance measures announced
in the March Budget.

The committee looked at issues concerning the administration,
clarification and simplification of taxation proposals.

On the recent changes to trusts and inheritance tax, the committee said this
was ‘not the way to make tax changes’.

Originally the government said all assets put in trust above the inheritance
tax threshold of £285,000 were subject to a 20% tax charge and an additional 6%
charge on assets above this limit every 10 years.

This was later amended to allow people to leave money in trust to their
spouses without facing a tax charge, and to reduce the tax burden on trusts set
up to pay out after a child reaches 18. A trust paying out at age 25 will be
charged just 4.2%.
The committee rejected government arguments that a consultation would have led
to forestalling and said if such a process had taken place ‘some of the concern
which was expressed following the Budget could have been allayed and the extent
of amendments to the Finance Bill which were tabled could have been reduced’.

‘The government’s intentions on measures such as these should be spelled out
fully, clearly and transparently’, with a transitional period of two years
reconsidered to include people who die without having ‘a reasonable opportunity
to review his or her will’

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