TODAY’S BLOG
INHERITANCE TAX IS EASY MONEY FOR HMRC
Few weekends go by without one of the main newspapers doing a story on inheritance tax. I imagine that is because inheritance tax is often cited as the most loathed tax. The general view being that Government gets taxes whilst you are alive and the final indignity is to take more upon death. A 2015 YouGov report indicated its unpopularity.
If you have been reading any of my blogs over the years, you will know that I am rather sceptical of surveys and their results being understood to represent an entire population. The survey in question had a sample size of 1,975 adults. Not enormous out of a population of 66million. There are all sorts of problems with sampling data – but I digress, it is from my anecdotal experience of 3 decades, unpopular.
In March, the Office for Budget Responsibility (OBR) projected 15% growth in inheritance tax (IHT) receipts from £5.2bn in 2020/21 to £6bn for 2021/22. They projected this sum to rise to £7.1bn in IHT receipts in 2024/25, after allowing for indexation of the bands which had been due to start in April 2021.
FROZEN – LET IT GO?
As you know, (page 12 of our client magazine Spotlight) the Chancellor elected to freeze all allowances in the last Budget. At the time, due in part to lower house prices the reprojection was £1bn less by 2024/25. However, it is clear that house prices have continued to defy logic by rising. If the rise in IHT receipts continue at the same rate as that experienced over April, May and June this year the 2021 total yield will likely exceed £6bn, rather more than anticipated (easy money eh?).
It’s always surprising that only around 25,000 estates bear IHT each year, but this year it could exceed 30,000. The nil rate bands (£325,0000) frozen until the end of 2025/26, then, unless values fall materially, this trajectory will continue.
And while on the subject of IHT, let’s not forget:
- There are two Office of Tax Simplification (OTS) reports on IHT reform that have, substantially, not been acted upon by the Government
- There have been a number of calls for wider reform of IHT from the likes of the All-Party Parliamentary Group for Inheritance and Intergenerational Fairness.
- A 2015 YouGov report found that IHT was the most disliked of all the personal taxes
If you are married (or are a widow/er), own your own home and have children, your nil rate band may well be £1m. However, if your estate is too large the additional main residence relief is reduced potentially to nothing.
If you are single and have no children, HMRC treat you as worthy of no favours, you have the standard nil rate band of £325,000 and no more.
SOLUTIONS? CLICK HERE!
Of course! there are solutions that may be helpful to you – so get in touch.
Dominic Thomas
Solomons IFA
You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk
GET IN TOUCH
Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT
Email – info@solomonsifa.co.uk
Call – 020 8542 8084
GET IN TOUCH
Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT
Email – info@solomonsifa.co.uk Call – 020 8542 8084