HMRC have advised that the nil rate band for Inheritance Tax has increased to £312,000 with effect from 6 April 2008.

IHT & Trusts Newsletter - April 2008 deals with Self Assessment for Trust and IHT changes introduce in Budget 2008.

The newsletter provides information on the following topics

• Self Assessment Trust and Estate tax returns
• Settlor-interested trusts and income tax
• Budget 2008: IHT highlights
• IHT nil rate band
• Transferable nil rate band (TNRB) and transfer of unused nil rate band
• IHT treatment of pensions

Full details are available at http://www.hmrc.gov.uk/cto/newsletter-april08.htm.

Inheritance Tax and DGS

HMRC have published Revenue and Customs Brief 23/08 on the valuation of gifts involving a Discounted Gift Scheme (DGS). This brief sets out how HMRC will deal with cases involving a gift for Inheritance Tax purposes involving a DGS where the settlor is older than 90 next birthday or is considered to be uninsurable as at the date of the gift.

This clarification arises from the Appeal Commissioner's decision in the Executors of the Estate of Mrs Marjorie Edna Bower (deceased) and the Commissioners for HMRC. The position outlined in the Brief is pending the outcome of the HMRC appeal.

The Special Commissioner held that the value placed by the Revenue was wrong and the determined figure was closer to that contended by the deceased's executors. The key issue in the decision was that due to the age of the person taking out the policy (90 yrs), was there any potential buyer of the annuity for a figure above the Revenue's nominal amount of £250. The Special Commissioner was of the view that for someone like him who was “fairly risk averse” that the resultant risk/reward ratio would seem to have been extraordinarily attractive.

Revenue and Customs Brief 23/08 is available at http://www.hmrc.gov.uk/briefs/inheritance-tax/brief2308.htm.