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Government setback on inheritance tax  The government has recently suffered a setback in its bid to clamp down on homeowners seeking to shelter property from inheritance tax (IHT), following a ruling by the Special Commissioners. The ruling could affect hundreds of thousands of individuals and couples who have set up ‘discretionary will trusts’ in a bid to minimise IHT. For the first time, it formally permits more than one nil-rate tax allowance to be applied to a single property. The commissioners hear and determine appeals concerning decisions of HM Revenue & Customs relating to all direct taxes such as income tax and inheritance tax. Their jurisdiction extends to the whole of the UK. Before the ruling, HM Revenue & Customs frequently stopped nil-rate bands being preserved in this manner. But, following a ruling by Dr Nuala Brice, one of 27 Special Commissioners, HM Revenue & Customs may find it harder to prevent different nil-rate bands being used together, which could make it possible for homes worth up to £550,000 to escape IHT. Since 1979, HM Revenue & Customs have reserved the right to attack solutions where someone has been given the opportunity to live in a property in these circumstances. This case is the first time it has been tested and HM Revenue & Customs have lost. So if you follow that wording carefully, there could be IHT planning opportunities. If you require any further information about the services that we provide or would like to review your financial planning position, please contact us |