New Inheritance Tax Laws Have a Sting That Reaches Into the Past
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Summary
The Chancellor is cracking down on inheritance tax loopholes with controversial new rules buried in the detail of his recent Budget. Lawyers, accountants and tax advisers have spent years devising schemes which exploit weaknesses in the inheritance tax (IHT) legislation in order to save on the tax beneficiaries pay after a death.
This tax planning to date has focused on reducing the value of a person's estate by making gifts and creating trusts. However, the government, aware of losing valuable revenue, will introduce a far- reaching income tax charge on pre-owned assets effective from April 6, 2005 The new rules will affect those who have owned assets, then given them away (or sold them at a low price) while still retaining a benefit in them. Each item given away, which an individual continues to use or enjoy in some way, will be deemed as a benefit to them and taxed accordingly. Benefit could mean living in a house rent-free (or at a low rent) or having the enjoyment of a painting now owned by someone else. The assessment of the benefit will be based on current market value, calculated and taxed annually. This truly is the gift which keeps on giving to the government.See the full content of this document
Extract
New Inheritance Tax Laws Have a Sting That Reaches Into the Past
At the time of the pre-Budget Report, the proposals attracted furious criticism from professional advisers in the industry. There was...
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