{"id":18875,"date":"2019-02-14T14:19:34","date_gmt":"2019-02-14T14:19:34","guid":{"rendered":"https:\/\/smh.group\/?p=18875"},"modified":"2023-02-15T13:50:34","modified_gmt":"2023-02-15T13:50:34","slug":"inheritance-tax-reductions-ahead-of-potential-reform","status":"publish","type":"post","link":"https:\/\/devstagesite.co.uk\/smhgroup\/inheritance-tax-reductions-ahead-of-potential-reform\/","title":{"rendered":"Inheritance tax reductions ahead of potential reform"},"content":{"rendered":"

Inheritance tax (IHT) will be slightly reduced for some from 6 April 2019, but greater reforms may arrive soon. <\/strong><\/h3>\n

The IHT residence nil rate band (RNRB) increases by \u00a325,000, bringing it to \u00a3150,000 for the 2019\/20 tax year. In theory that means a married couple can pass on up to \u00a3950,000 (2 x nil rate band of \u00a3325,000 + 2 x RNRB of \u00a3150,000) to their heirs free of tax.<\/p>\n

In practice matters are much more complicated, as eligibility for the RNRB comes with a variety of conditions primarily designed to limit the cost to HM Treasury.<\/p>\n

A final \u00a325,000 increase in the RNRB happens in April 2020, increasing the available band to \u00a3175,000 and the theoretical IHT-exempt estate up to \u00a31 million. There is some doubt, however, whether this will happen, at least as legislation currently envisages. The reason for that uncertainty is a review of IHT, which the Chancellor requested from the Office of Tax Simplification (OTS) in January 2018.<\/p>\n

The OTS review of inheritance tax<\/strong><\/h3>\n

The first part of the OTS review was published last November. It detailed over 3,000 responses to their consultation and made a range of proposals for simplifying IHT administration.<\/p>\n

The second part of the review, which examines the \u201ckey technical and design issues\u201d is due in spring. It would not be surprising if the OTS suggested some reform of the RNRB, which it said, \u201cattracted a lot of comments \u2026 due to its complexity and because those who do not have children, or their own home, may not be covered by it\u201d.<\/p>\n

One obvious possibility would be to enlarge the nil rate band and scrap the RNRB, but as the OTS noted \u201cany changes would of course involve an Exchequer cost\u201d. Mr Hammond\u2019s predecessor turned down such a suggestion, despite heavy criticism of the RNRB\u2019s legislative complexity.<\/p>\n

In the meantime, as the end of the tax year approaches the regular IHT exemptions need to be considered.<\/h3>\n

These are currently:<\/p>\n