by Stephen Barratt
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5 February 2020Private Client Tax
by Stephen Barratt
In recent weeks there has been a good deal of speculation and comment about possible reforms to Inheritance Tax (IHT) legislation. These have included some relatively straightforward simplifications from the Office of Tax Simplification (OTS) and comment from the Chancellor of the Exchequer, Sajid Javid who in October 2019 said that he understands the arguments against the tax.
“I do think that when you pay taxes already through work or through investments and capital gains and other taxes there's a real issue with then asking them, on that income, to pay taxes all over again.”
IHT is universally unpopular but why else might it be in the spotlight?
As a tax, IHT is very inefficient when it comes to its processes and accounts for less than £6bn per year in revenue which, in comparison with other taxes on the British public, is relatively low.
From the roughly 580,000 or so deaths in the UK each year 275,000 families will be required to complete inheritance tax forms for the estate, but out of that number only circa.24,500 will actually be required to pay IHT.
What will change?
We cannot be certain what will change, but one cannot ignore the ongoing discussions. The report from the all-party parliamentary group ‘Inheritance & Intergenerational Fairness’ published in January 2020 makes proposals that are more radical than those included in the OTS report published in July 2019. These radical proposals include:
What should I do next?
At this stage, no specific action needs to be taken but perhaps more urgency is needed now in thinking about how wealth is to pass through the family. People certainly need to ‘watch this space’ because changes do appear to be afoot and there is gathering momentum for them.
We will be providing more information as matters develop, but if you have any concerns please do get in touch. You can also come and hear from our team of experts on any changes made in the upcoming Chancellor’s Budget at our annual budget breakfast events hosted in Newbury and Southampton.
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