Inheritance Tax (IHT) rules around excluded property is being amended.
This is to prevent UK domiciled individuals using the rules around excluded property under an offshore trusts to avoid Inheritance Tax while retaining a benefit in the property.
The legislation will amend current IHT excluded property and settled property provisions. The changes are designed to primarily replicate the tax treatment that a UK domiciled individual would suffer if the trust was a UK trust rather than an offshore trust. So, the outcome ensures any potential reduction in the value of a person’s estate as a result of these schemes remains liable to inheritance tax.
These provisions will apply to any new schemes entered on or after 21 March 2012.
The secret to effective IHT planning is to keep the planning conceptually simple, non-contentious and fall within the terms and spirit of the legislation. Where schemes circumvent the rules, it is fair to expect that these schemes are expected to be caught by these changes in legislation. Since the early 1990’s HMRC, Treasury and the Government have been very clear on their outlook. Sometimes, the cost of these schemes and the associated legal battles more than outweigh the tax savings potential.
Always plan carefully
Any questions – my email is welshmoneywiz@virginmedia.com
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Tags: Budget 2012, Financial Planning, Investment Planning, portfolio investors, Wealth Management and Tax Planning
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