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Revenue clears the way for IHT advice

Skandia believes the latest HM Revenue & Customs clarification on the Finance Act changes to inheritance tax and trusts should give advisers the confidence to recommend the products again.

Head of tax and financial planning Colin Jelley says advisers need to be aware of the latest developments to ensure they are offering cli- ents best advice.

He recommends advisers to consider using the 12-month window for reporting trust cases to HMRC and to delay reporting where poss- ible because of potential increases to the reporting threshold from 10,000 to 200,000 a case.

Jelley says advisers should consider topping up pre-Budget life policies held in a pre-Budget trust that has not been changed rather than recommending new ones, as HMRC has confirmed that such increases will remain subject to the old taxation regime.

He also says advisers should use discounted gifts as before as HMRC has confirmed that gifts into such trusts are discounted by the value of the client’s right to receive capital payments which will not be subject to exit charges under the new rules.

Jelley’s comments come as Skandia unveils research which reveals that 46 per cent of advisers stopped recommen- ding trusts earlier this year as a result of the Budget although 95 per cent intend to restart now that the Finance Act has been passed.

The research also shows that only 2 per cent of advisers have been put off recommending trusts altogether while 85 per cent say there is increased demand for advice since the Finance Act.

Jelley says: “The impact of the changes on adviser’s business should not be under- estimated. But the message that we are getting from adv- isers is clear – despite the rule changes under the new reg- ime, the popularity of trusts is set to remain strong.”


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