A Government review of inheritance tax law may mean thousands of elderly home-owners and farmers will receive unexpected tax bills from April 2005 warns the Society of Trust and Estate Practitioners.
The impact of the review of pre-owned assets and gifts with reservation could lead to unforeseen income tax liabilities arising, says the STEP. The Revenue is planning to charge income tax on the rental value of property left in trust where a benefit is retained.
Society of Trust and Estate Practitioners spokesman Robert Ham says: “Thousands of home-owners have legally placed their properties in trust to pass their estate intact to their families. But since the new tax will apply to existing arrangements, homeowners will be charged income tax on a deemed benefit in kind unless they pay the full market rent on their homes. These schemes were particularly popular with the elderly, who will now face an unexpected tax bill.”