On 7 November, the UK government launched its review into the taxation of trusts, almost a year after announcing it in the 2017 Autumn Budget.
The consultation, which will run until 30 January 2019, focuses on the principles of transparency, fairness and neutrality, and simplicity. The government’s stated aim is to ensure that the many people who use trusts will benefit from a ‘clear and transparent regime that is easy to understand’.
STEP welcomes the review, which provides an opportunity to address some of the complexities that exist around the current system of trust taxation and to suggest changes to the taxation of trusts that would be positive for both practitioners and their clients. It will also enable us to address any misconceptions around the uses of trusts.
Media around the consultation has, in many cases, focused on the issue of improving transparency in relation to trusts to prevent them being used for tax avoidance purposes. However, transparency is only one of the aims of this review, and the government acknowledges in the consultation document that there is already a large amount of ongoing activity in relation to trust transparency, and suggests that any new activity must take into account that the vast number of trusts are used legitimately.
STEP has already formed a working group to help respond to this important review, which includes senior members drawn from both the UK Technical and UK Practice committees. We have been in contact with HMRC since the review was announced, and will continue to engage as we develop our response further. We will keep members updated of further news in this area over the coming months.
Simon Hodges is Director of Policy at STEP