Budget 2006 _ More Trusts Get Caught By Inheritance Tax Lifetime Charge

Published / Last Updated on 22/03/2006

With effect from midnight last night most 'interest in possession' trusts and 'accumulation and maintenance' trusts will be treated the same as  'discretionary' trusts in that if a person gifts more than the nil rate tax threshold (£285,000 with effect 6 April), there will be an immediate tax liability to pay of 20%.

In addition, there will also be the normal periodic 10 year charge that currently applies to discretionary trusts.

However, if the trusts are absolutely held for someone to pay out at 18 years of age or for a disabled person there may be scope for no tax to be payable.

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