New IHT rules for trusts and divorce settlements

Government has argued that the upheaval in the IHT rules for trusts was needed to prevent ‘tax avoidance’. However, during the Parliamentary debates it was pointed out that trusts were used in many situations when tax would not be an issue. In particular, Government was pressed to alleviate the impact of the new rules for settlements made in connection with divorce and other relationship breakdowns. This was rejected by the Paymaster-general in the following terms: