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11/12

Clarity needed on multiple trusts

The new draft proposals issued as part of the Draft Finance Bill appear to still allow opportunities for use of multiple trusts, providing additional property is not added on the same day. 

The Rysaffe principle is where multiple trusts are set up on different days so that each trust can benefit from its own nil rate IHT band of £325,000. If each trust is less than £325,000 then there is no IHT to pay, something which the Government has indicated it wants to crack down on.

In the Autumn Statement the Government performed a u-turn on their previous plan to implement a single settlement nil rate band. The Government implied it still believed in the principles behind the proposed legislation, but believed there would be a better way of implementing it. However, draft legislation issued yesterday as part of the Draft Finance Bill appears to provide opportunities for further multiple settlements to be established where additional property is added on different days. The proposals do however introduce new measures when property is added to multiple settlements on the same day, to ensure the value of all the settlements are be taken into account for both periodic and exit charge calculations.

It is not clear how these new proposals will impact existing trust arrangements.

There will now be a three month consultation period with the industry.

Rachael Griffin, head of technical marketing, Old Mutual Wealth: 

“More clarity on the new proposals is required to prevent advisers and clients facing a period of uncertainty. It is unlikely the Government has changed its mind on clamping down on the Rysaffe practice, and it could be that additional changes are introduced further down the line. In the meantime, advisers should continue to assume existing trusts are ring-fenced under the old rules and, to be safe, not add further property to them until there is clarity”.

FOR MORE INFORMATION CONTACT:

Sophie LentonOld Mutual Wealth023 8091 677007834 499 558

Notes to Editors:

Old Mutual Wealth

It has an adviser and customer offering spanning:

  • Financial advice delivered by the Intrinsic network in the UK and AAM Advisory in Singapore
  • Platform based wealth management and protection products delivered by Old Mutual Wealth in the UK and Old Mutual International globally
  • Asset management solutions delivered by Old Mutual Global Investors
  • Discretionary investment management delivered by Quilter Cheviot.

Old Mutual Wealth oversees £123.5 billion in customer investments (as at 31 December 2016).

Old Mutual Wealth is part of Old Mutual plc a FTSE 100 group that provides life assurance, asset management, banking and general insurance. Old Mutual is trusted by more than 19.4 million customers across the world and has a total of £394.9 billion assets under management (as at 31 December 2016).

This press release is for journalists only and should not be relied upon by financial advisers or customers.

Please remember that past performance is not a guide to future performance. The value of investments and the income from them can go down as well as up and investors may not get back any of the amount originally invested. Exchange rate changes may cause the value of overseas investments to rise or fall.

This communication is issued by Old Mutual Wealth Management Limited, a Private Limited Company (Company Number 0604270), Old Mutual House Portland Terrace Southampton Hampshire SO14 7EJ.