Your Wills and the future of Inheritance Tax
In recent weeks, we’ve all had time to think.
Does your Will reflect your current wishes and maximise current Inheritance Tax (IHT) reliefs and exemptions available?
The Office of Tax Simplification and The All-Party Parliamentary Group for Inheritance and Intergenerational Fairness are calling for a shake-up of Inheritance Tax (IHT) and Trusts. Some proposals are administrative whereas others are radical.
Whilst many proposals are welcome and aim to simplify IHT, it is likely that parents who gift cash to help children get on the property ladder, or grandparents who help with education costs, whilst relying on the ‘gifts out of excess income’ IHT exemption may face an immediate 10% charge to IHT if their annual gift exceeds £30,000. Gifting family businesses and farms to the next generation could also give rise to a charge to IHT; albeit payable in 10 interest free instalments.
The proposed reduction in IHT payable during lifetime and on death to 10% for Estates up to £2m (20% thereafter) is attractive although abolishing reliefs such as Agricultural Property Relief and Business Property Relief for genuine trading operations resulting in an immediate charge to IHT could hinder succession planning.
The ‘Capital Gains Tax (CGT) uplift’ on death enabling Executors (or beneficiaries) to sell assets with little or no CGT payable thereafter, may be withdrawn. The original cost of the asset will stand resulting in the next generation picking up the CGT liability on its sale. This will require meticulous record keeping!
However, whilst the Government gather their thoughts, the current IHT rules still stand and now is a good time to make plans.
Call Katie or Sarah on 01223 810100 to discuss your thoughts. We are able to review your Wills, calculate your potential liability to IHT and identify planning opportunities.