Autumn Statement 2014: Inheritance tax on trusts

Relevant property trusts are subject to a separate inheritance tax ‘periodic charge’ regime – charges arising on each ten year anniversary and when capital leaves the trust. HMRC have been consulting on simplifying the calculation of these charges, the latest proposals in relation to which create the concept of a single ‘settlement nil-rate band’ for allocation across new settlements by the same settlor.

It was announced in the Autumn Statement that the settlement nil-rate band idea will not go ahead. Instead, targeted anti-avoidance to combat the use of multiple or pilot trusts will be introduced alongside other simplification measures.

This announcement is a big surprise. There have been three separate consultations on the simplification of periodic charges and the level of detail provided in relation to the ‘settlement nil rate band’ idea (including a proposal that the new rules should apply to all trusts created on or after 6 June 2014) gave the distinct impression that this latest incarnation would be the one that went ahead. We await the latest proposals with great interest!