This year’s Budget has brought new measures forecast to raise £3.1bn in tax avoidance, including by tackling “abuse” of an inheritance tax loophole through the use of ‘deeds of variation’.
Mr Osborne said the detail will be reported by the autumn, adding “we will seek a wide range of views” during the consultation period.
The full Treasury Budget document explains legislation will provide new rules about adding property to trusts on the same day as a purchase, to target inheritance tax avoidance through the use of multiple trusts.
New rules published in draft on 10 December 2014 will be legislated in a future Finance Bill.The government has made changes so that the new rules apply only when property is added to more than one relevant property trust on the same day.
“Stakeholders were also concerned that small same day additions by the settlor to a number of trusts for say, trustee fees, would result in the property in those other trusts being aggregated and brought into the 10 year charge calculation,” the document states.
“The revised legislation therefore provides that where the value of the addition is £5,000 or less there will not be a same day addition,” it stated, adding that the period of grace for not applying the new rules about additions to existing trusts to a will have been extended by 12 months.”
According to the new rules, the exclusion will be limited to deaths before 6 April 2017 and the calculation of trust charges will be simplified by removing the requirement to include non-relevant property in the end calculation.
Changes are also being made in certain areas of the relevant property trust legislation to close a gap and ease the effects of legislation elsewhere.
Other avoidance measures included the confirmation of a diverted profits tax, which was originally announced in the last Autumn Statement, aimed at large multinationals who artificially shift their profits offshore.
Mr Osborne said: “I can confirm that we will legislate for it next week and bring it into effect at the start of next month.”
He also mentioned amendments to corporation tax rules aimed at preventing contrived loss arrangements, while the government will no longer allow businesses to take account of foreign branches when reclaiming value added tax on overheads.
Mr Osborne said: “We will close loopholes to make sure entrepreneurs relief is only available to those selling genuine stakes in businesses. We will issue more accelerated payments notices to those who hold out from paying the tax that is owed.”
He added that the government will stop employment intermediaries exploiting the tax system to reduce their own costs by clamping down on the agencies and umbrella companies who abuse tax reliefs on travel and subsistence.
“Let the message go out: this country’s tolerance for those who will not pay their fair share of taxes has come to an end.”
ruth.gillbe@ft.com
