Warning about unintended consequences of trying to close inheritance tax loophole
During his Budget speech on Wednesday, Mr Osborne said that the Government would be reviewing deeds of variation – which allow changes to be made to Wills after someone’s death.
The Chancellor is concerned that the measure is being abused and promised action, taking a swipe at the tax affairs of Ed Miliband as he did so.
The Leader of the Opposition has been accused of using a deed of variation to alter a will made by his father Ralph Miliband; moving ownership of some of the family’s home into his and his brother’s names. The Labour leader has repeatedly denied that the decision was taken to reduce tax liabilities.
There are concerns in both the accounting and legal profession that the review could have unintended consequences. Their argument is that the deeds are not just tax planning vehicles and that changing the law could affect legacy giving.
Helen Donoghue, director of the Charity Tax Group, said: “Plans to abolish deeds of variation were previously brought by government more than 20 years ago and we found that it had the potential to have a significant impact on legacy giving.
“At the time we had to do a lot of work, along with accountants and lawyers, to ensure that legacies were not negatively affected. We’re concerned that this will be a problem for the sector.”
Tony Millson, Head of Private Client at Royds, added: “If this legislation takes place, it will be a retrograde step.
“It will also be even more important that people review their Wills regularly and carefully, if there is going to be no opportunity to rectify matters after death.”