Stephen Pallister, a partner at Charles Russell solicitors, says the Chancellor has been unfair. "There are examples of trusts that have been used for tax avoidance, but the vast majority are set up for family reasons," he says. "These new rules are so draconian that we think we will have to review 90 per cent of the wills we have written for clients."
In most circumstances, the IHT rules are simple. When you die, the value of your estate is added up. Any value above a certain amount, the nil rate band (this year it is £285,000), is subject to IHT at 40 per cent. There are certain exemptions - money left to a spouse is tax-free, for example - but otherwise there's a charge to pay.
Only when people set up trusts do the rules become more complex, especially following the Budget. The first principle to understand is that with trusts, there may be three sets of IHT charges to pay: when the trust is set up, during its lifetime, and when money is eventually taken out of the trust. In each case, what is due depends on the type of trust established, but in many cases, the Chancellor has tightened the rules so that people will pay more.
In almost all cases, IHT is now payable when assets are first moved into a trust, on their value above the nil rate band. Previously, this rule was much less strictly applied - money moved into a trust during your lifetime was often tax-free.
From Budget Day, if you set up a trust while still alive, there will be 20 per cent tax to pay on assets moved into it. If you set up a trust as part of your will, the tax charge will be 40 per cent, unless the trust is for the benefit of your spouse - and then only if the trustees do not have the power subsequently to use the money for the benefit of someone else.
Once the trust is up and running, there are likely to be further tax charges - the general rule is now an IHT charge of 6 per cent of the value of the assets every 10 years. There are two exceptions. Trusts set up for spouses who qualified for the 40 per cent exemption are also excluded from the 6 per cent tax. So are accumulation and maintenance trusts, which parents or grandparents can set up on behalf of children.
But to avoid the 6 per cent charge, an accumulation and maintenance trust must be structured so that the children receive all the assets in it when they turn 18 - previously the trusts did not have to pay out until age 25 to be tax-free.
The final set of IHT charges is payable when assets are taken out of a trust. Before the Budget, in many instances, there were no exit taxes to pay. Now, there will almost always be a charge - usually a part of the next 6 per cent tax that would have been due if the trust had continued. If you take the assets out five years before the next 10-year charge is due, you would pay 3 per cent.
David Kilshaw, a tax partner at accountant KMPG, says that while the Chancellor argues these changes are simply a crackdown on tax avoidance, many of them are unfair. "Trusts aren't always created for tax purposes," he says. "Often, they are set up to deal with family circumstances."
The most obvious example is the change to the age limit on accumulation and maintenance trusts. These are often set up when a parent dies, to provide children with capital later. The money is taxable when placed in the trust - now beneficiaries will have to be given full access at age 18 to avoid additional charges, even though many parents would be uncomfortable giving large sums to children at this age.
Is your life insurance affected?
* Anyone buying life insurance is routinely sent a form to fill in if they want the policy to be held within a trust. That way, your heirs do not have to pay inheritance tax on the proceeds when you die.
* In the Budget, Gordon Brown introduced a rule for policies set up in this way since 22 March. The person holding the policy has to pay a 6 per cent charge on its value above the nil rate band every 10 years.
* The insurance industry is furious - the Association of British Insurers suggests up to 4.5 million people could be affected in future. This may be an overestimate but, for those potentially affected, the new rules are a minefield.
* If the charge was applied this year and you had insurance for £300,000, you would potentially owe IHT of £900 (6 per cent of the £15,000 over the £285,000 nil rate band). But Lee Francis, of the ABI, says no one can be sure what they owe, because the Revenue has not worked out how to calculate the value of an insurance policy. Insurance worth £300,000 when you die, say, is much less valuable to a middle- aged policyholder in good health. "It's a complete mess," he says.
* Until the position is made clearer, some insurers are suggesting that new policyholders should think twice about setting up a trust. But remember that a 6 per cent charge in 10 years' time will be a smaller bill than the 40 per cent that could otherwise be due when you die.Reuse content