Scottish Life International does not support the proposed changes to pre-owned assets tax regulations, as announced by Dawn Primarolos ministerial statement last week.
The life office believes the proposals discriminate against trust arrangements using life assurance policies as the underlying investment.
SLI technical manager Gerry Brown says: Where the trust asset is a house, the legislation will require tax to be charged on the open market rental value each year.”
“However that rental value need only be established every five years and will not be increased between valuations to reflect house price inflation, currently in excess of 10 per cent annually. In contrast a life policy is revalued every year and tax paid on 5 per cent of the value.”
“In most trust arrangements using life policies, the individual establishing the trust has no right to receive payments from the trustees but must rely on the trustees discretion.