The Conservative Party is planning to propose a series of amendments to the Finance Bill this afternoon opposing the changes to Inheritance Tax (IHT) treatment of trusts.
Following a private meeting last Wednesday between tax specialists, key professional interest groups and the Conservative Treasury team, the Conservative Party have come forward with three areas they want changed.
The Party plans to propose amendments to the Bill, opposing the IHT changes to trusts, because:
- The changes are retrospective, and hit those people who have been saving assuming a certain tax structure, suggesting it would be less iniquitous if the proposals simply looked to the future
- The changes are based on a fundamental misunderstanding of what trusts are actually used for, with many people using them in cases of divorce or illness, without thought of tax avoidance
- The changes will be highly expensive, with the cost of changing wills expected to be £250m, while Revenue from the IHT charges would be just £15m.
The Conservatives also point out many of those affected will be older people who may not be competent enough to adjust the trusts accordingly, and so trustees will have to go through the courts to make the necessary changes, putting a huge pressure on the courts.
At the meeting last week, chaired by Theresa Villiers, Shadow Chief Secretary to the Treasury, and introduced by George Osbourne, the Shadow Chancellor, the Party says it brought together a range of experts to brainstorm what the problems with the legislation are and what could be done going forward.
Matthew Hancock, economic adviser to Osbourne, says the meeting was arranged to make sure any proposals were in the best interests of the tax system, with the next step being to propose amendments to the Bill this afternoon to try and deal with the identified problems and try to stop the “using a sledgehammer to crack a nut” approach.
Villiers says the Conservatives strongly oppose these new stealth taxes and will be working alongside ea wide ranging coalition of professionals to urge the Government to think again about these proposals.
She adds: “This new tax will hit hard-working prudent families trying to plan responsibly for their future, and inflict a huge and unnecessary legal bill on the million plus peoples who may have to redraft their wills. The vast majority of trusts affected by these new taxes are not set up to avoid tax; they are set up to help ordinary people deal with some of the complications of family life in modern Britain.”
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From 6 April 2019