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Last Friday HM Revenue & Customs announced changes to tax rules on gains made from a life assurance policy that had been held in a bare trust.

Previously, any chargeable gains were taxed on the adult beneficiaries or in the case of someone aged under 18 the settlor, the person who set up the trust.

However HMRC has changed the rules so the beneficiary will always pay the tax charge, unless it is the parents of the beneficiary who set the trust up in which case it is taxed on the parents.

Julie Hutchison, head of estate planning for Standard Life, said the changes meant those setting up the trust would be saved tax and as it would generally be children that were affected by the changes, due to their overall lack of income, they would have their personal allowance available.

However Ms Hutchison said problems could arise in tax returns that have already been completed.

She said: "Unfortunately it is not commencing 6 April 2008 it is commencing 6 April 2007 and the problem with that is anybody who has completed a paper tax return would have had to file that by 31 October and this announcement from the revenue was in November so that was rather unfair.

"It means people may have to go back and change their tax return and how on earth are they going to be aware of this change?"