Are IHT rules outdated and need reform?
Tax Update | Haslers
Inheritance Tax (IHT) rules in the UK have long been a topic of debate, with many arguing that they are outdated and need reform. Despite some changes over the years, the rules remain largely stuck in the past, with high rates and complicated exemptions that can be difficult for families to navigate.
One of the main issues with the current IHT system is the high rate of tax that can be levied on estates. At present, estates worth over £325,000 are subject to a tax rate of 40%, which can be a significant burden for families who may be inheriting property or other assets. While there are exemptions available for certain types of assets, such as those held in trusts or businesses, these can be complex to navigate and may not always be applicable.
Another issue with the current IHT rules is that they do not take into account the changing nature of family structures and societal norms. For example, many families now have stepchildren or unmarried partners who may not be eligible for certain exemptions or allowances under the current rules. This can lead to situations where families are unfairly penalised or left with a large tax bill to pay.
Overall, there is a growing consensus that the IHT rules in the UK are in need of reform. While there have been some changes in recent years, such as the introduction of a main residence nil-rate band, these have not gone far enough to address the fundamental issues with the system. As such, it is likely that calls for reform will continue until meaningful changes are made to the way that inheritance tax is levied in the UK. Contact Haslers to find out more today.
