Inland Revenue gets tough on inheritance tax avoidance

TAX

From the 6 April inheritance tax mitigation schemes that circumvent the rules on gifts with reservation will be subject to a pre-owned assets tax

It was no surprise when the December 2003 pre-budget statement announced a crackdown on inheritance tax (IHT) mitigation schemes, which the Inland Revenue saw as circumventing the rules on gifts with reservation. But it was totally unexpected that this is going to happen from 6 April this year by means of an income tax charge on what could be called the annual enjoyment value (AEV) of pre-owned assets. These are the assets from which a person continues to derive a benefit despite having put them outside their estate for IHT purposes. This income tax charge is known as a pre-owned assets tax...