IFAs encouraged to act as IHT deadline approaches

Independent financial advisers (IFAs) in the UK have been urged to notify their clients of impending changes to inheritance tax (IHT) legislation.

Clients of IFAs with trust arrangements made before 22 March 2006 may need to consider switching beneficiaries before the deadline of 5 October.

Changes made to beneficiaries after this date could become subject to IHT relevant property regime (RPR), which means that interest in possession (IIP) trusts could potentially suffer from entry, ten-yearly periodic and exit tax charges.

Head of tax and financial planning at Skandia, Colin Jelley, told FTAdviser.com: "Whilst the changes have been law for a while and most advisers have got to grips with the new regime a key deadline is approaching."

"If any clients want to make a change to the beneficiaries of a pre-22 March 2006 trust arrangement… they only have a month to do so if they don’t want to change the IHT status of the trust."

The changes, which were first introduced in 2006, included a transitional period, which was then extended to 5 October 2008.