Chancellor Philip Hammond is facing fresh calls to consider Inheritance Tax (IHT) reforms ahead of the Autumn Budget on Monday 29 October.
This week, financial planners are calling on the Chancellor to ‘dramatically simplify’ the rules surrounding gifting, amid concerns that the existing annual limit of £3,000 is simply too low and that the range of allowances available is too confusing.
Sean McCann, of NFU Mutual, described IHT allowances as “fiendishly complicated” and said that Mr Hammond should consider replacing all existing IHT gifting exemptions with one single annual exemption of £10,000, which would rise in line with inflation each year.
The calls follow concerns previously raised by the Office of Tax Simplification (OTS), which recently criticised the dizzying range of limits and exemptions Britons must navigate in order to get around the so-called ‘death tax’.
Earlier this week, research carried out by insurance company Direct Line found that some seven million UK adults had gifted around £227 billion to their children ‘early’ in an effort to reduce the amount of IHT their families will need to pay when they die.
Under existing rules, IHT is levied at a rate of 40 per cent of an estate’s value – and this applies to all estates valued at £325,000 or more. There are numerous ways that families can reduce the amount they will eventually pay, including by making gifts or leaving money to charities in their Wills, but the rules are notoriously confusing and specialist legal advice is always vital.