A number of changes to the way inheritance tax (IHT) is charged on trusts is being considered in the latest HMRC consultation.

The consultation, which builds on the Inheritance Tax: Simplifying Charges on Trusts consultation document published on 13 July 2012, sets out options on how the ten-yearly IHT charges on trusts ('periodic' charges) and exit charges on trusts that hold or dispose of relevant property before the first ten-year anniversary of the trust, or between such anniversaries, can be simplified.

Areas identified for simplification include: simplifying the calculation of IHT trust charges, including the consideration of charges on certain death in service pension schemes; standardising the treatment of accumulated income; and aligning filing and payment dates for ten yearly and exit charges with the Self Assessment framework.

Proposals put forward in relation to the simplification of IHT calculations include ignoring historical information and non-relevant property to reduce the complexity involved in arriving at the tax due, and using a simple rate of 6% of the chargeable transfer in the calculation of periodic and exit charges, instead of lengthy calculations of the effective rate and settlement rate.

This consultation applies to settlors and trustees, and to practitioners involved in setting up or administering trusts.

The consultation closes on 23 August 2013 and documentation is available from HMRC