As announced in the December 2014 Autumn Statement, legislation will provide new rules about adding property to trusts on the same day, to target Inheritance Tax avoidance through the use of multiple trusts (based on the principles established in the Rysaffe case and commonly known as pilot trusts), which could mean that each pilot trust had its own nil rate band without reference to the other trusts.
With politicians now firmly in the run up to the May 2015 election, George Osborne’s last Autumn Statement before that election had a welcome surprise for home owners, as well as further measures for savers. However there were several more technical amendments which may also affect landowners.
In the Budget 2012 the Chancellor announced measures that the Government believed would ‘simplify the Inheritance Tax regime for relevant property trusts and reduce compliance costs for trustees and practitioners’.
Where a property has been an owner’s only or main residence throughout the whole period of ownership, private residence relief will be available on the capital gain arising on sale. However, where a property has not been occupied as the owner’s only or main residence throughout the period of ownership, private residence relief may only be available for a proportion of the gain.
As analysed in previous articles, a limit will apply to restrict the Income Tax relief available to individuals from 6 April 2013 to the greater of £50,000 or 25% of total income. This legislation will affect some farmers and landowners, especially with the fluctuations in farming results expected in the 2012 and 2013 harvests.