An official review of Inheritance Tax (IHT) will be published before the end of the year, after Chancellor Philip Hammond bypassed the opportunity to address IHT in this week’s Budget, it has emerged.
In the run-up to Monday 29 October, Mr Hammond was facing mounting pressure to reform IHT following criticisms raised by the Institute of Fiscal Studies (IFS) and other groups throughout the year.
In early 2018, the Chancellor himself criticised the tax as being overly complex and penned a letter to the Office of Tax Simplification (OTS) urging it to review the UK’s IHT regime.
However, despite rumours that the report was due to be published any day soon – and that Mr Hammond was likely to move to reform IHT in his Budget – no mention of the tax was made during the Chancellor’s speech on Monday.
Under the current IHT system, each individual is able to pass on an estate worth up to £325,000 before incurring IHT.
Any estates valued above this are taxed at a rate of 40 per cent of their total value, unless specialist advice is sought and appropriate measures are taken to reduce the eventual amount to be paid.
Under relatively new legislation known as the residence nil rate band (RNRB), individuals can pass on an additional £125,000 in property value to their children, grandchildren or any other direct lineal descendants tax-free.
Other ways of reducing IHT bills including making small gifts throughout your lifetime, or leaving a portion of your estate to a charity in your Will.
Seeking advice when it comes to IHT is becoming increasingly important, as the Treasury’s tax take in this area is growing year-on-year as more and more families find their estates pushing above the threshold.
For specialist advice, get in touch with our expert team today.