Rysaffe set to continue following Govt

The Rysaffe principle still stands as the Governments draft finance bill omits an expected crackdown on the use of multiple trusts.

Rysaffe set to continue following Govt

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According to Skandia International, part of Old Mutual Wealth, the draft legislation appears to provide opportunities for further multiple settlements to be established where additional property is added to trusts on different days.

However, the life company adds that the proposals do introduce measures that regulate the addition of property to multiple settlements on the same day to ensure the value of all the settlements are taken into account.

The Rysaffe principal involves the use of multiple trusts set up on different days so that each can benefit from its own nil rate inheritance tax (IHT) band of £325,000. If each trust is less than £325,000 then there is no IHT.

The Government has previously indicated that it wishes to crack down on the use of multiple trusts, with HM Revenue & Customs issuing proposals to introduce an all-encompassing single nil-rate band in June.

However, in this month’s Autumn Statement, delivered by chancellor George Osborne, the Government performed a U-turn on the proposals, implying that it still believed in the principles behind the proposals but felt there would be a better way of implementing it.

Skandia International said it is not yet clear how the new proposals in the draft finance bill will impact existing trust arrangements.

Rachael Griffin, head of technical marketing, added: “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.”

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