The CLA has responded to HMRC’s Taxation of Trusts consultation. HMRC is undertaking a review of all aspects of trust taxation to see if transparency, fairness and tax neutrality can be achieved.
Although inheritance tax is often seen as a tax on death, it also has lifetime consequences too, and we have stressed that trusts are not usually used by members for tax mitigation but as an important tool to protect personal and business assets both on a day-to-day basis and for the next generation. We have also highlighted areas where we believe there could be a more straightforward regime – particularly for trusts for young people. We have also argued against some potential changes that were suggested, for example, to remove the Principal Residence Relief for some trust beneficiaries.