Having stayed relatively unchanged for two decades, the inheritance tax (IHT) treatment of trusts was thrown into confusion when the Budget unexpectedly heralded sweeping changes – see our Spring newsletter.
This was followed by the Finance Bill in April, and the Finance Act in July, which provided details of the rule changes. Extensive lobbying led to some amendments to the original proposals, nevertheless, the new landscape for trusts is very different to the one in existence a few months ago and it is important for all affected parties to review existing and pending trusts to determine the best way forward.
Overview
So what are the key changes?
- The inheritance tax regime previously in place for interest in possession (IIP) trusts and accumulation & maintenance (A&M) trusts has been significantly changed and most of these trusts will now be taxed under similar rules to those which have always applied to discretionary trusts.
