The measures announced in the March budget, and strongly criticised by industry professionals, imposes new charges on life interest trusts.
Richard Brooks, director of RBC Regent Tax Consultants, described the new measures as ‘a pretty horrendous piece of legislation’ which had disregarded years of consultation.
‘The Labour Party have never particularly liked trusts – they have always regarded trusts as the way that the wealthy avoid taxes – and that’s the problem.
They have overlooked the fact that trusts are actually useful for managing people’s money, not just tax planning.
Mr Brooks explained that in the 1980s people had been encouraged to set up trusts for wealth planning purposes.
Until this year, for example, a grandparent who wanted to pass on inheritance to a grandchild at age 25 could do so without paying tax on transfer of the capital.
But the new rules have put an end to that, and also say the capital has to ‘vest’ on the child at age 18.
‘You can imagine what happens when 18-year-olds inherit a couple of million pounds,’ he said.
