Tax day 2021: the key announcements
In a recent article in the Tax Journal summarising the key announcements from the Spring Budget 2021 and the Finance Bill 2021, Private Client & Tax Partner, Sue Laing shares her comments on the Government's responses to the consultation on the taxation of trusts.
“HMRC’s long awaited response to the 2018 taxation of trusts consultation, that no fundamental reforms are required, is unsurprising. The original reasons for the consultation were unclear; it had quite a broad ambit and focused on principles. There have also been two changes of chancellor since, so time has moved on and the Treasury has bigger issues to worry about! HMRC seemed concerned about potential unfairness in some areas but the responses (largely from advisers and professional bodies) seem to have allayed those concerns, e.g. they have retained PPR for trusts. Whilst the lack of immediate fundamental reform is welcome, there are some missed opportunities for improvement. There is a clear need to reform vulnerable beneficiaries’ trusts, particularly at a time of great concern for mental health; a return of lifetime qualifying interest in possession trusts – an idea that HMRC had seemed receptive to – would have been logical; and the UK trust industry could have benefitted significantly from enabling UK professional trustees to run offshore trusts without those trusts becoming resident here. Maybe there is no appetite for such changes, or maybe HMRC are leaving the door ajar for more fundamental IHT reform in future (albeit a huge exercise)? For now, yesterday’s response confirms that the government will continue to review trust taxation on a case by case basis.” Sue Laing, Private Client & Tax Partner.
To read the full article in the Tax Journal, please click here.
This quote was first published in the Tax Journal on 26 March 2021.