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Finance (No. 2) Bill

My hon. Friend makes a powerful point. The measure will impact with disproportionate harshness on women. Because of the rule against flexibility, the spouse exemption will be lost in virtually every case where a trust is set up. Until Budget day, a lawyer who drafted a trust without flexibility might easily find herself on the end of a negligence suit. Indeed, flexibility in trusts has been considered so important that Parliament specifically inserted flexibility into trusts via section 32 of the Trustee Act 1925. The Government’s response is to say that if people want to keep their spouse exemption, they can change their wills or vary existing trusts and opt for outright gifts or the restrictive trusts that comply with the conditions that I have just outlined in the new section 49A, but this is not an adequate answer. The proposals will have a disproportionate effect on many people who, for family reasons—not for tax reasons—do not wish to make outright gifts to their spouse. These people face the invidious choice between making arrangements that they believe are inappropriate for their family’s welfare, or facing an unwelcome extra tax bill that could require the family home to be sold.