The replacement rules will still seek to prevent tax avoidance through the use of multiple trusts.
The settlement Nil Rate Band rules would have seen each settlor have just one Nil Rate Band (currently £325,000), which they could allocate across all relevant property trusts that they created. Trusts created before 7 June 2014 would have remained subject to the old relevant property rules, leaving two sets of complex rules operating in parallel.
The result could have saddled clients with trusts where the purpose is to accept the payment of death benefits, such as from life assurance contracts and pensions, with the burden of tax compliance and reporting, even where no inheritance tax is due.
It will be interesting to see the detail in the Finance Bill and hope that it delivers on the promise of simplifying the taxation of trusts and Inheritance Tax (IHT).
This commentary is our understanding of the Autumn Statement on 3 December 2014. It is for general information only and does not constitute advice. If you would like advice on trusts, please do not hesitate to get in touch with us on 01392 875500 or info@SeabrookClark.co.uk