The proposed changes announced in the budget for the taxation of trusts are due to be amended.

Following claims by the tax industry that far more families could be affected than what the Government were estimating, it is now thought that many wills will not now need to be redrafted.

Gordon Brown has amended the proposals announced in the budget for the reform of trust tax.

The main changes are...

• Trusts set up for Children will not have a tax charge until they become 25. The original proposal meant that children would need to become need absolutely entitled at 18, an age thought to be too young by many. However, trusts set up by grandparents will still be caught.
  
  
• Interest in possession trusts created on death will be unaffected so that transfers to spouses will not be caught by entry and exit charges.
  
  

However, existing trusts and those set up before death will still come under the new regime. This creates the following tax charges...

1. A 20% tax charge on the value of all assets placed into trust worth more than the Inheritance Tax threshold of £285,000.
2. A 6% charge levied every ten years on the assets held in trust.
3. A further 6% charge when the assets are taken out of the trust.

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