11 August 2006
Gordon Brown attacks family trusts - July update
Paul Tobias, head of Hart Brown Solicitors' Trust & Investment Department, reaction to Gordon Brown's attack on family trusts as contained in the Finance Act 2006, which received Royal Assent on 19 July 2006, was:
“Although valuable concessions were obtained as a result of a concerted campaign by lawyers and other professionals, aided by the Press, the changes that have now been introduced to the IHT treatment of trusts are still radical in nature.
For instance, the privileged IHT treatment of accumulation & maintenance trusts no longer applies to new trusts and is diluted in relation to existing trusts. This is quite a blow as this form of trust has for many years been a popular means of putting money aside for children and grandchildren.
Most existing and new trusts will now be subject to the IHT regime for discretionary trusts, which is likely to result in extra IHT being payable.
The changes will undoubtedly make IHT planning more challenging and the fear must be that this is just part of a trend under which the government will make life progressively more difficult in this respect. However, currently there remains plenty of scope for meaningful IHT planning, although the moral here may be to get started sooner rather than later while the going is good!”
To see our fact sheet on this subject, please click below.
The IHT treatment of trusts after the Finance Act 2006