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Original poster

To think that it's time tax exemption for trust funds ended?

35 replies

Bibblebobblebibble · 07/06/2024 17:29

So, this guy getting married today inherited £9 billion and didn't pay any inheritance tax on it, because trust funds are exempt from inheritance tax.

I don't get how this is fair/ possible - can someone explain to me how this is still a thing?

OP posts:
ThreeFeetTall · 07/06/2024 17:54

Does the Duke of Westminster pay 6% of £9 billion every 10 years?

Cazpar · 07/06/2024 17:54

It's not exempt from IHT.

It's exempt from IHT on the death of the beneficiary.

It is however subject to principal charges every 10 years at the rate of 6%. Assuming someone lives 60-70 years, their trust will suffer the same 40% IHT over the course of their lifetime as it would if they'd paid tax when they died.

One could of course avoid this by keeling over in your 30s, but that could hardly be said to be the preferable option.

MrsJackThornton · 07/06/2024 17:53

They will pay 6% tax on the trust every 10 years as a form of inheritance tax

Plus they will pay tax on any money taken out of the trust

The estate operates as a business which employs many people and contributes significantly to our food supplies in the UK. Breaking the estate up to get all the IHT in one lump sum rather than the 6% every 10 years would not necessarily be in the countries best interests.

I'm not saying it's perfect but it's somewhat different to what the OP makes out

VolvoFan · 07/06/2024 17:52

The politics of envy never dies, does it?

Meadowfinch · 07/06/2024 17:52

Property held in trust is subject to inheritance tax, paid gradually, every 10 years. It allows large businesses and farming estates to avoid being broken up and so maintains their economy of scale.

Also a trust isn't 'owned' by anyone, it passes down from generation to generation. The Duke of Westminster can't sell up and spend it on wine, women & song.

Fluffypuppy1 · 07/06/2024 17:50

Trust have to pay 6% of the total funds in the trust to the government every 10 years. Also any income taken from the trust is taxed at usual UK tax levels. As a pp has said, the money belongs to the trust and he receives an income from it. It’s not his money to spend as he wishes.

IncompleteSenten · 07/06/2024 17:49

No government is going to remove something they and their mates are the ones benefitting from.

My son has a personal injury trust fund and pays capital gains on anything taken out annually over the allowance (which used to be 12 grand btw and is now 3).

ohtowinthelottery · 07/06/2024 17:47

@Bibblebobblebibble Have you just name changed from Taller Sally?

Spirallingdownwards · 07/06/2024 17:43

Because a trust fund isn't inherited/left by will. Assets don't belong to him but to the trust and trustees distribute the funds.

The same as life assurance policies are generally in trust too and don't fall within probate which millions of us have or do you only want to tax rich people who have access to trusts? You do realise you can put things into trust funds too.

Original poster
Bibblebobblebibble · 07/06/2024 17:40

It confuses me that Labour are making a big deal about VAT for school fees, but not looking at other ways to get some of this wealth stuck with these 1 percenter types redistributed.

OP posts: