HMRC has launched a consultation setting out the principles for taxing trusts and are seeking views and evidence on reform in line with them.
The consultation document summarises the policy principles underpinning the review, which are transparency, fairness and simplicity. In addition, the administrative processes in place should serve to reduce the risk of error.
Simon Rylatt, partner at private wealth law firm Boodle Hatfield, said: “It is in some ways surprising to see such a wide-ranging review given that, over the last couple of decades, many historic tax reliefs associated with trusts have been legislated away.
“Similarly, recent reforms in the UK now mean that there is a high level of transparency regarding trusts, certainly when looked at from a global perspective.
“Care does need to be taken not to introduce reforms that could unduly dissuade individuals from using trusts because they have an important role to play in a number of everyday situations, for example in looking after money for minor children.”
Nicola Roberts, tax partner and UK head of private client at Deloitte, added: “Trust taxation can be complicated, and so any simplification would be welcome. However, substantial changes have been made to the taxation of trusts in recent years, particularly non-UK trusts, and so a period of stability would also be welcome.”
The consultation closes on 30 January 2019. Once the UK Government have considered the responses they have received, a further consultation will be held on a specific proposal for reform.
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