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

[Bibblebobblebibble]

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?

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.

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.

@Bibblebobblebibble Have you just name changed from Taller Sally?

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).

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.

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.

The politics of envy never dies, does it?

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

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.

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

I think the time in which Labour would go after reforming trust law or tax arrangements has passed, and the Conservatives won't. So we are stuck with it, I think. They say we are sliding back into Victorian levels of wealth inequality anyway, so it fits.

Sorry sent too soon...surely if someone dies then it continues in trust to someone else and they continue paying the 6%, is that right?

Is that your most intelligent comment on the subject? Taxation policy is a public policy like everything else. I'm sure you can manage something more substantive to defend the regime if you support it.

Yes this is correct, assuming that the assets are not distributed.

If they are distributed out of the trust, something called a proportionate (or exit) charge kicks in, which means IHT is charged on any assets that leave the trust.

Yes it's basically a perpetual 6% tax every ten years on trusts

Thanks both

Belittling someone you disagree with by bringing their intelligence into question is very much indicative of envy. The fact of the matter is you don't like people who are worth more than you (they inherited family wealth that they can't spend). It's tiresome. It must be exhausting to be this way, day in, day out.

There are other ways to raise revenue without a blanket assault on trusts.

You could add National Insurance to investment income, equalise capital gains, a wealth tax etc.

Belittling someone you disagree with by bringing their intelligence into question is very much indicative of envy. The fact of the matter is you don't like people who are worth more than you (they inherited family wealth that they can't spend). It's tiresome. It must be exhausting to be this way, day in, day out.

I was belittling the intelligence of the comment. I thought surely "blah blah, politics of envy" really isn't the most incisive thing any given person could have to say in the subject.

But you've just made a load of wild assumptions and then followed up with "you're jealous" again, so I don't know.

I did try asking you why you supported the system.

There won't be any major "assault" on trusts.

What is genuinely surprising, though, is that the reparations-supporting activists haven't come after them loudly. Particularly as there are still very traceable sugar fortunes (say), wrapped up in trusts.

I was expecting it the last few years but nothing has hit the mainstream. I think the caravan has moved on.

Don't be silly. The comment came from me, who else could you possibly be belittling? I support a 'regime' that will never see the light of day, which is to ensure that any wealth earned, inherited or gifted is not subject to redistribution by the State.

@VolvoFan sometimes intelligent people say stupid things. (Although sometimes it does transpire that the person saying the unintelligent thing was unintelligent themselves.)

You really need to work on your bedside manner. Have a nice evening.

If parents die and the kids are little what do you think should happen to the money the parents had?
A - give it to the government in tax
B - give to SiL / Best Friend / Granny - and hope it gets spent on the kids and not lost, or mis-spent or lost and that there is enough left for them when they need it.
C held in legal trust to ensure that the kids benefit from it and the money is looked after for them until they are old enough.

Hmmm - tricky.

I'm going to assume OP isn't coming back since it's clear she is grossly misinformed on tax law concerning trusts, but for anyone interested it's worth noting that since 2006 trusts have essentially lost all of their inheritance tax advantages. There are still a large number of legacy trusts (or QIIPs, if you're interested) in existence which can benefit from the old inheritance tax reliefs, but these are becoming increasingly rare and will eventually die off as their beneficiaries pass away.

That said, there are and always have been incentives other than tax advantages to open trusts, so we still see a lot of trusts being created today.