The Government has confirmed it will close a loophole allowing the use of multiple trusts to avoid inheritance tax from 2015.
In the Autumn Statement today, the Treasury said the changes will take place alongside simplifications of trusts.
In May, HMRC launched a consultation proposing a change to the rules on multiple trusts with regards to the £325,000 nil-rate inheritance tax allowance and how it applies to the 10 yearly 6 per cent charge.
At present each split trust set up by the individual is granted the £325,000 nil-rate allowance before the 10 yearly 6 per cent charge is levied.
However, HMRC will now apply the allowance across all the trusts set up by the individual when it comes to calculating this charge.
Concerns have been raised that the change could apply retrospectively but it remains unclear whether it will apply to existing trusts.
The Treasury will also now move to simplify filing and payment dates for IHT relevant property trust charges.
The Autumn Statement says the Government will “legislate to treat income arising in such trusts which remains undistributed for more than five years as part of the trust capital when calculating the 10-year anniversary charge.”
It adds: “The Government will consult on proposals to split the IHT nil rate band available to trusts with a view to delivering this change alongside simplification of the trust calculations in 2015.”