Recent changes in the tax regime could have an adverse effect on many trusts and wills.
The new Government’s first budget increased Capital Gains Tax (CGT) to 28% for higher rate taxpayers. The Law Society has warned that this new rate “will charge any gains made while an estate is being administered and also gains for the duration of a trust”.
Will trusts, which are often created for the benefit of children, are particularly vulnerable to the changes.
The President of the Law Society, Robert Heslett, said: “Many hardworking families will often look to create a protective tax regime for their children in the event that they are orphaned at a young age by leaving assets in trust until the children are old enough to manage the assets without the guiding hand of their parents.
“There is a real danger of trust assets being eroded through a combination of income tax at 50 per cent, CGT at 28 per cent and the impact of the changes to the inheritance regime introduced in 2006.
“Personal representatives, trustees and anyone else appointed to set up a trust and settle assets within it should urgently seek advice from their solicitor to ensure that arrangements are structured as tax efficiently as possible for the benefit of these vulnerable beneficiaries in the light of these new developments.”
Please contact Dominic Mackenzie if you would like more information about wills and trusts.