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Thousands of unsuspecting people in the south east could fall victim to the Government’s proposed changes in Inheritance Tax, warns leading legal firm Cripps.
Under the plans, which could come into force next April, people would be prevented from reducing their exposure to inheritance tax by setting up multiple trusts for their heirs, each with a £325,000 tax free allowance. The changes would only permit one allowance of £325,000, which could be divided between several trusts.
“With house prices and land values so high in the south east this would affect people with relatively modest means, not just the obviously wealthy,” said Cripps’ senior tax manager Roger Holman.
“It could also affect those with life cover written in trust; anyone who might receive a death in service benefit which they plan to leave to their dependents in ‘pilot trusts’ or ‘spousal bypass trusts’; anyone with a pension fund worth more than £300,000, anyone who has set up trusts (eg for grandchildren) and anyone who is a trustee of an existing discretionary trust worth more than £325,000 – who could face penalties if they miscalculated the tax-free allowance.
“If trusts can no longer be used to safeguard the assets people have built up another worry is that they might go directly to those who are too young to handle wealth responsibly.
“These changes will affect many in the south east and we advise people get advice as soon as possible.”
Cripps has offices in Tunbridge Wells, Kings Hill, London and Sandwich.
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