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Inheritance Tax Changes Announced in Budget
Published July 2006 by Alan Neal
You will undoubtedly have seen a considerable amount in the Press about the changes announced by Gordon Brown in his Budget Speech on 22nd March introducing major changes to the taxation both of Lifetime and Wills Trusts to Inheritance Tax. These proposals were also retrospective in relation to trusts existing on Budget Day.
The original proposal were swingeing and would have led to the need for most clients to review their Wills. Rather belatedly Gordon Brown has introduced some changes to ameliorate the effect of his proposed new regime so far as Will Trusts are concerned, though without touching provisions so far as Lifetime Trusts are concerned.
The Budget proposals have created a period of considerable uncertainty given that these have the force of law provided they are passed in the Finance Act within four months of Budget Day. There was a huge effort on the part of the taxation profession to lobby against the original proposals. Because of the time taken by the passage of the Finance Bill through Parliament it became virtually impossible to advise clients properly on how to proceed since there was absolutely no certainty as to the position of the final law.
This position I am pleased to say has now been reached with the recent passing of the Finance Act.
So far as Wills are concerned, we will be writing to all clients for whom we hold Wills explaining the effect of these new provisions and pointing out where changes may need to be made to their Wills. I am pleased to say that the net position following the recent amendments means that the initial fears to a large extent are abated.
We are, however, having to undertake a complete review of all existing Trusts whether made by Lifetime Deed or pre Budget Day Wills and will be writing to clients to advise on the effect of the changes and where steps need to be taken in order to overcome the effect of the much harsher tax regime that has now been imposed.
A more detailed article on the changes will be contained in our next Newsletter.
If you would like to find out more about the services that we provide, please e-mail or contact us to arrange a meeting.
