Climb down on bare trusts for children

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If you are still feeling confused as to what exactly the changes to trust taxation announced in budget 2006 mean in practical terms, then don't take it to heart. HMRC are still in a conundrum themselves as evidenced by the latest episode of the saga of the FA 2006 changes concerning children's trusts.

The CIOT and ICAEW recently discovered that HMRC had formed the option that bare trusts for minor children were actually accumulation and maintenance trusts and so any transfer into such a trust was therefore a chargeable lifetime transfer. We detailed back in February the scope of the problems that this view might cause. The two tax bodies gave the following advice: "For the time being, the safest course of action is not to make any significant gifts to minor children until HMRC have clarifie...

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