The Finance Bill (No 2) 2006 - Death of Trusts?

Emma Hatley and Judith Ingham Partners Withers LLP.

The Budget press release BN25 entitled 'Aligning the Inheritance Tax Treatment for Trusts' issued in March 2006 caused great consternation in accounting and legal circles. Little was known about the detail of the reform until the Finance (No 2) Bill 2006 (the Bill) was issued on 7 April 2006. The draft legislation confirmed with few concessions the Government's intention to go ahead with the draconian proposals set out in BN25. However the Government tabled amendments on 8 and 9 June 2006 which should mean that fewer people need to radically rethink their estate planning. There remained scope for further amendment between June and the report stage in early July 2006. The Bill is likely to receive Royal Assent in late July 2006.

Accumulation and Maintenance Trust (A and M Trusts) 

A and M trusts are special trusts for children/grandchildren which used to qualify for special inheritance tax status provided the beneficiaries became entitled to the income by the age of 25 at the latest. The Chancellor's starting point in BN25 was that the only trusts for...

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