Local accountants highlight changing attitudes to Inheritance Tax
In recent months both sides of the political debate have put forward suggested changes to Inheritance Tax (IHT), which Haslers Chartered Accountants hopes to highlight for families.
Most recently, the Office of Tax Simplification (OTS) released a new review commissioned by the Government, which looked into new ways of improving IHT.
Amongst its 11 recommendations are proposals to reduce the tax-free gifting period from seven to five years, amending taper relief and reforming the rules relating to capital gains tax and the inheritance of businesses.
It is not yet clear whether the Government will go ahead with these proposals, but should they be implemented it could mean a considerable shift in the way that people manage their estate, according to Haslers.
Meanwhile, the Labour Government has put forward its proposals for a “lifetime gifts tax”, which would reduce the inheritance tax allowance to £125,000.
Labour’s Land for the Many report indicates that this significant shift in the way estates are taxed could raise an additional £9.2 billion for the public coffers.
However, it is feared that much of this money would come from the middle classes, who have already been squeezed in recent years by changes to taxation and slower wage growth.
Paul Reynolds, Tax Partner at Haslers, said: “There is currently a lot of debate around the future of IHT at the moment and it is certain that both sides of the political spectrum feel it needs reform.
“While IHT only affects a small percentage of estates each year, the number of families affected is growing due to rising house prices, particularly in London and the South East, so people must plan to manage the tax bill for their beneficiaries.
“Both of the plans outlined above are yet to be legislated for, but they are things that should be taken into consideration when arranging your estate as the rules surrounding the tax typically include long periods in which to manage your affairs.”