Trust Consultation Outcome

Following the changes announced in the October 2024 budget, restricting the total BPR/APR available to 100% on the first £1 million and 50% thereafter, the position for trusts has been unclear. HMRC have now released their consultation document on the proposed trust implications. It is worth noting that these are only the proposals at this stage and not yet confirmed changes. The key proposals are below:

• From 6 April 2026, when the new rules come into force, the £1 million restriction will apply in relation to all trusts, including those already established. This means the restriction will impact ten year charges that arise after 6 April 2026.
• For exit charges that arise after 6 April 2026, which are based on the rate at the last ten year anniversary, there will be no protection. The ten year charge rate will be recalculated with the £1 million restriction.
• For new trusts established post budget date, the £1 million will be split between new trusts set up on a chronological basis
• For life interest trusts, where the trust assets are amalgamated with the life tenant’s estate, the £1 million restriction will apply to both, so there is no separate £1 million for the trust in this instance.
• For bereaved 18-25 year olds, whose parents have set up a trust in their will, the £1 million would apply per beneficiary so as to not create inequality between older children inheriting sooner than their younger siblings.
• The £1 million cannot be transferred to a spouse.
• All trusts set up by the same settlor will be treated as ‘related’, so there is no minority discount by say, spreading shares between different trusts.

We will of course send further updates once the outcome of the consultation is advised. However, if you would like to discuss your trust further in the meantime, please contact Gemma Hedges on 023 8046 1259 or email Gemma Hedges.