The professional association which represents both onshore and offshore trust specialists worldwide has dubbed the new reforms ‘Penalising Families for Using Trusts to Hold their Assets’.
The comments follow last week’s UK Budget which introduced a 20% inheritance tax charge on new accumulation and maintenance trusts with assets over £275,000.
These trusts will also be taxed on a ten-yearly basis.
In addition, existing trusts will be subject to the six per cent ten-yearly inheritance tax rule unless they are converted so that children concerned receive property outright at the age of 18.
John Riches, who chairs the STEP technical committee, said: ‘The inability to make new lifetime trusts for children and grandchildren without a 20% charge on the value in excess of £275,000 means that families will be forced either to make outright gifts at a point where the receipt of wealth could seriously deflect children and young adults from their studies, or make no gifts at all.
It is difficult to see what fiscal objective this actually achieves.
‘With no consultation whatsoever the existing rules on the inheritance taxation of trusts have been turned upside down.
