Royal London 360° has pulled one of its trusts from the market after it was hit by the government’s closure of an IHT loophole.
The Isle of Man life company has closed SRIT trust to new investors in the wake of last week’s Pre-Budget Report, in which the Chancellor Alistair Darling announced an IHT avoidance strategy using revert-to-settlor-trusts and reversionary interest was to be shut down.
Royal London 360° is reported to have said the trust was not part of its product offering and used only for ultra high net worth individuals in specific circumstances.
An HMRC spokesman said the trust rules modifications: “The changes will ensure fairness for all by providing that the IHT charges on transfers into trust cannot be avoided."
Neil Chadwick, Technical Marketing Manager, Royal London 360°, said: "The Pre-Budget Report 2009 introduced new Inheritance Tax Anti-Avoidance legislation, targeting schemes which achieved a tax advantage through the use of reversionary interests.
"The new legislation, although not specifically targeting Royal London 360°, is so far-ranging that it has an impact on a non-core trust that we made available for use with our products. As such, this trust will no longer be available. However, I must stress that nothing else in our core trust or product range is affected.
"We see this from time to time and, whilst disappointing, it is not really anything for us to worry about."
