In June last year HMRC released a consultation document entitled “Inheritance Tax: Simplifying Charges on Trusts – the next stage”. In a nutshell HMRC proposed to split a single inheritance tax nil rate band (NRB) (currently £325,000) among all trusts set up by an individual during their lifetime. The measure would apply to both new and existing settlements and was intended to block a well-used tax planning strategy under which an individual can create multiple settlements on different days with each trust claiming the full NRB:
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* based on a maximum 6% tax charge
Following a wave of criticism from the profession, namely that the measure would make the calculation of tax charges on trusts far more complicated, the Treasury announced that it was to postpone the measure until the 2015 Budget and, in the meantime, it will conduct a further consultation.