Disabled to Be Spared Stealth Tax on Trusts
Byline: TIM SHIPMAN
MILLIONS of disabled people will be spared from a stealth tax on their financial trusts after a climbdown by Gordon Brown.
The Chancellor yesterday introduced changes to his tax raid on trust funds after complaints that it would target the most vulnerable in society.
Those with degenerative conditions such as Alzheimer's disease who set up trusts to pay for their care when they can no longer support themselves would have faced a 20 per cent tax. The Chancellor would also have grabbed another 6 per cent every decade.
But last night the Treasury tabled amendments to the Finance Bill which will ensure the disabled are more protected.
MPs and campaigners said the changes did not go far enough. They warned those with conditions such as schizophrenia which fluctuate throughout life, could still have to pay the new tax because of the Bill's wording.
Changes ensuring more lenient treatment of those who put life insurance policies into trust for their dependants have also been made.
However these will not help those who set up so-called life policy trusts in future.
The Government claimed life insurance put into trusts was never supposed to be taxed at the new rate. But yesterday it bowed to demands to write the exemption onto the face of the Bill.
Critics have been fighting for weeks to get the Chancellor to change his mind since he slipped out details of the tax raid in the Budget small print. …