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Finance (No. 2) Bill

I thank the hon. Gentleman, and I am sure that the Committee Chairman will be delighted to hear that. It is interesting to note that the briefing is signed not just by the Chartered Institute of Taxation and the Law Society, but by a large number of other bodies. It discusses the key topic of inheritance tax on life assurance policy pay-outs, stating:"““It is usual for a life assurance policy pay-out to be written in trust for the spouse or children””." It identifies two problems that may result from the new legislation, and continues:"““The proceeds may now be liable to inheritance tax in two circumstances. First, if the life assured dies before the ten-year anniversary when the trust was originally taken out and the trust is not ended at the ten-year anniversary . . . Second, if the person taking out the life cover is in ill health at the ten-year anniversary of the trust.””" We heard earlier today that the life insurance company, Skandia, believes that some 4.5 million policies may be affected as a result of the changes. I have a few questions for the Paymaster General. How many people will be affected by the new regime? Estimates seem to range from almost none to many millions. Will spouses be affected by double taxation—a key point, on which absolute clarity would be particularly helpful? How many policies currently written into trusts may be affected, and have the Government considered that problem? How many wills will need to be changed? Finally, what consultation was carried out with the industry—the life insurance industry, the pensions industry and the legal profession? All relevant bodies seem to be saying that it was very little, and perhaps that explains why the Government are in such a pickle over this problem.