Inheritance Tax (IHT) often described as Britain’s “most hated tax”, enrages many and is considered unfair for a range of reasons.
IHT, a tax on the estate (the property, money and possessions) of someone who has passed away, theoretically charges 40 per cent on the value of an individual’s estate above £325,000. There are many criticisms of the tax, the main one being that this “double taxation” forces taxpayers to pay out on already taxed income once they die. It is also an extremely complicated tax which can baffle the bereaved at a time when they may already be very stressed and grieving.
However, with rising property prices countrywide, coupled with an IHT threshold that has been frozen until at least 2020/21, more and more people are being caught by IHT. In fact, government receipts are now at the highest level both in annual revenue and as a proportion of GDP.
At the request of the Chancellor, the Office of Tax Simplification, an independent statutory body, was asked 18 months ago to review IHT and make recommendations. The report, which is currently under consideration, could lead to a major shake-up in the way assets are passed on in the UK.
Tax Partner at Beavis Morgan, comments: “The amount of Inheritance Tax that the government collects each year of £5 billion (compared with a total tax take of around £800 billion) does not warrant the complexity in a tax that often has to be administered and certainly paid by the recently bereaved. A rethink of this tax is long overdue to make it transparent and fair.”
No matter who you decide to leave your estate to, the tax implications of transferring wealth should not be ignored. Professional advice should therefore be sought to protect your wealth, secure the financial future of your beneficiaries and plan for IHT, a legitimately avoidable tax. We do however recommend that planning starts as early as possible.
Our Beavis Morgan tax experts are available to guide you and advise you on the available strategies. For more information, please contact your usual Beavis Morgan Partner.