Inheritance tax change 'could force elderly abroad'
New rules for trusts would put up inheritance tax bills for wealthy families
Plans to simplify and tighten rules governing trust funds designed to protect assets from inheritance tax could drive more elderly people overseas, tax experts have said.
HM Revenue & Customs has announced its intention to prevent people setting up a series of tax-free trusts, each worth £325,000. Under the new rules, only a single £325,000 trust would be allowed.
"Assets transferred into trusts are removed from an individual’s estate," the Financial Times explains, "and so are ineligible for inheritance tax."
A tax adviser told the paper that the rule change would “result in considerably more new trusts falling into the inheritance tax net, increasing the total inheritance tax payable by trustees.”
According to experts quoted in the Daily Telegraph, an increasing number of wealthy people could leave the country in order to avoid paying the tax.
“Large numbers of people of modest means have been swept into the net because of the rapid rise in house prices compared with the much smaller increases in the inheritance tax threshold," Mark Littlewood, director general of the Institute of Economic Affairs, told the paper.
Limiting the number of trusts people can have is just another punitive step that could drive some to relocate overseas.”
A consultation document published by the government last week said that it was seeking a "fairer way of calculating [inheritance tax] charges" and acknowledged the " concerns expressed by trustees and practitioners about the impact such a change would have".
