The Clerical Medical Family Wealth Trust and the Scottish Equitable Plus Trust look likely to be the...
The Clerical Medical Family Wealth Trust and the Scottish Equitable Plus Trust look likely to be the latest victims of the ongoing dispute between international investors and regulators surrounding the UK's pre-owned asset tax, which imposes an income tax on people who give away assets but continue to use them.
UK Chancellor Gordon Brown had announced that schemes involved in inheritance tax mitigation would be targeted, but it was uncertain as to what would the full implications of this would be.
Now the UK has clarified its position. According to Gerry Brown, technical manager at Scottish Life International, the legislation will still be retrospective in that transfers after 17 March 1986 will trigger a tax liability should the other requirements for a charge be met.
This could mean investors could still be left to pay thousands of pounds in tax.
However, Brown said: "Users of these trusts have a number of options which need to be discussed with intermediaries. It is possible to unwind these trusts but where the trust asset is a house there will be a stamp duty land tax charge and legal fees for the conveyancing. It would also be possible for the original investor to give up any possibility of benefiting. Intermediaries will suggest delaying any action until the Finance Bill becomes law towards the end of July and the valuation rules are published in the autumn."
The Inland Revenue has stated that 'discounted gift schemes' such as the Scottish Life International Secure Estate Plan will not trigger a pre-owned asset tax charge.
According to SLI, it is still possible to undertake legitimate inheritance tax planning using a combination of an offshore life assurance policy and a suitable trust, and professional advisers should appreciate the closing down of some pre-packaged schemes will not impact the use of many of the planning techniques currently available.
Joined as head of strategy, multi asset, in June
Group income protection
Nine in 10 do not have income protection
Set to become part of Single Financial Guidance Body