Continuing our theme of breaking down the Chancellor's pre-budget speech earlier this month, we now focus on another piece of swift "pen work".
The Government plan to close the loophole used by over 20,000 homeowners in the UK where they have "sold" their home to a trust (avoiding "gifting rules" for an IOU. The IOU is also then passed in a seperate trust to the children, meaning that the parents can remain in the property without a gift with reservation.
The Government are likely to take the step of closing this loophole, and also, unsually, making it retrospective - i.e those 20,000 homeowners who have already done this - making their trusts ineffective and their homes back in the estate for Inheritance Tax at 40%!
Our view
Retrospective legislation is, in our opinion, totally unfair! Will the government pay to have the trusts unravelled? Will the government pay the legal fees that have been wasted?
We would like to bet that no MP has set up this type of trust. If any had then what are the odds that it would not be retrospective? This Government is the worst in history for stealth taxation - yet they continue to be re-lected.
The Chancellor continues to prey on "middle England". Those people who have bothered to save for their own property and have not taken a penny from the State.
There are however, hundreds of ways to mitigate and plan to reduce Inheritance tax.
Visit our site Inheritance Adviser.com or contact us for advice .