The UK Government has scrapped plans to introduce a single nil-rate band for inheritance tax across all trusts.
On 10 December 2013, HMRC has published a document in response to the consultation: Inheritance Tax: Simplification of trust charges the next stage, which was published in May 2013.
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The consultation document has proposed the splitting of the nil-rate band as an alternative to the requirement on trustees to gather historical information that aggregated settled property in order to determine the rate of tax.
HMRC said that draft legislation for inclusion in Finance Bill 2014 on the treatment of accumulated income and the alignment of payment and filing dates for IHT 10 year anniversary and exit charges was published for technical consultation, which will close on 4 February 2014.
The proposal to introduce a single nil-rate band had received strong opposition which stated that it would be an onerous task for trustees to try and gather details of all the trusts the settlor had set up and also the industry felt that the proposals were unfair and amounted to retrospective legislation if applied to existing trusts.
Many respondents have offered alternatives to introduce a single nil rate band, which included introduction of a pro-rata exit charge for the nil-rate, having a de-minimis set at £1,000, considering trusts established within a seven year period for existing trusts.
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By GlobalDataHowever, in response to the opposition the Government said that legislation on the nil-rate band and simplification of calculations will be included in Finance Bill 2015.
