Finance Bill Tracking Service 2010 | Budget 2010

BN29 TAX CHANGES FOR CERTAIN TRUSTS COMPENSATING ASBESTOS VICTIMS

Who is likely to be affected?

1. Trustees of certain trusts that have been specifically set up as part of an arrangement made by a company with its creditors to pay compensation to asbestos victims.

General description of the measure

2. This measure will exempt trustees of certain trusts from capital gains tax (CGT), inheritance tax (IHT) and income tax. The trusts that will benefit are those set up on or before 23 March 2010 as part of an arrangement made by a company with its creditors and specifically to pay compensation to, or in respect of, individuals with asbestos related conditions.

3. The Government intends to legislate this measure in a Finance Bill to be introduced as soon as possible in the next Parliament.

Operative date

4. This measure will have effect on and after 6 April 2006.

Current law and proposed revisions

5. Trustees are subject to IHT charges every 10 years on the value of property held in trust above the IHT nil rate band (currently £325,000) and also on certain payments made out of the trust. Trustees are also liable to income tax on income arising to the trust, and CGT on disposals of certain trust assets.

6. This measure provides for exemptions from the IHT, CGT and income tax charges on the trustees of certain trusts that have been set up as part of an arrangement made by a company with its creditors. For the exemptions to apply the trust must also be specifically for the purpose of paying compensation to, or in respect of, individuals with asbestos related conditions. This will apply to trusts set up on or before 23 March 2010.

Further advice

7. If you have any questions about this change, please contact Angela Walker on 020 7147 2773 (email: angela.walker1@hmrc.gsi.gov.uk). Information about Budget measures is available on the HM Revenue & Customs website at www.hmrc.gov.uk