The ATT invites comments on this consultation which explores possible options for simplifying the calculation of the IHT periodic and exit charges on trusts that hold or dispose of relevant property.
Inheritance Tax (IHT) is commonly understood as the tax paid on an estate when an individual dies. However, it can also apply to certain lifetime transfers and there is a separate regime that applies to assets held in certain types of trust. Broadly, these charges that apply to trusts arise once every ten years and when property is withdrawn from trust. The calculations concerned can be complex and burdensome.
The Government wants to retain a regime that charges IHT on assets held within trusts. But it recognises that for some smaller trusts in particular the burdens and professional costs involved in collecting the information necessary to undertake these tax calculations, and the process of undertaking the calculations themselves and making a return to HMRC, can often be disproportionately large compared to the tax at stake. For HMRC too, the costs of performing and checking these computations is sometimes not cost-effective.
This consultation explores whether there may be options for reducing these burdens and/or simplifying the calculation of these charges while not jeopardising tax revenues.
Please send any comments to atttechnical [at] tax.org.uk with 'IHT - Trusts' in the title by 21 September 2012.