{"id":25330,"date":"2023-10-12T09:17:15","date_gmt":"2023-10-12T08:17:15","guid":{"rendered":"https:\/\/smh.group\/?p=25330"},"modified":"2023-10-12T09:17:15","modified_gmt":"2023-10-12T08:17:15","slug":"farewell-to-inheritance-tax","status":"publish","type":"post","link":"https:\/\/devstagesite.co.uk\/smhgroup\/farewell-to-inheritance-tax\/","title":{"rendered":"Farewell to inheritance tax?"},"content":{"rendered":"<p><strong>In July, the government was reported as holding talks on abolishing inheritance tax (IHT). This wasn\u2019t given much credence at the time, but there are now reports that the March 2024 Budget will include a reduction to the 40% IHT rate as a prelude to future abolishment.<\/strong><\/p>\n<p>IHT is charged at the rate of 40% on estates worth more than \u00a3325,000. However, there is also a further allowance of \u00a3175,000 that can be set against the value of a main residence if the property is inherited by descendants. Both allowances are shared between spouses or civil partners, so there is a potential family exemption of \u00a31 million.<\/p>\n<p>Although the combination of frozen allowances and higher property values has brought more estates into the IHT net, the tax is only paid on around 4% of estates.<\/p>\n<h2><strong>Argument for change<\/strong><\/h2>\n<p>Given that investments are generally paid for out of taxed income, IHT can be seen as a double charge to tax, preventing people passing on their wealth to children and grandchildren.<\/p>\n<ul>\n<li>It applies to virtually all assets, without the exemptions given for capital gains tax \u2013 such as for a main residence.<\/li>\n<li>Although IHT is mainly paid by the wealthy, the very rich typically have far more scope for reducing their overall IHT burden by, for example, making lifetime gifts and using trusts.<\/li>\n<\/ul>\n<p>The moderately wealthy, where a main residence may account for the majority of wealth, may not be able to afford such tax planning measures.<\/p>\n<h2><strong>How likely?<\/strong><\/h2>\n<p>Although a rate reduction of a percentage point or two cannot be ruled out, full abolition is almost certainly going to be too costly in the current economic climate \u2013 some \u00a37 billion in lost tax revenue annually \u2013 especially as HMRC is on course to have a record-breaking year from IHT receipts.<\/p>\n<p>Then there is the forthcoming general election. A Labour government would be more likely to move in the opposite direction by cutting IHT allowances \u2013 in particular, the \u00a3175,000 main residence allowance.<\/p>\n<p>In the meantime, if your estate may become liable for IHT, there are measures you can take. HMRC\u2019s basic guide to IHT, including details of various exemptions, can be found <a href=\"https:\/\/www.gov.uk\/inheritance-tax\" target=\"_blank\" rel=\"noopener\">here<\/a>.<\/p>\n<p>Our\u00a0<a href=\"https:\/\/devstagesite.co.uk\/smhgroup\/chartered-accountants\/\"><strong>Yorkshire and Derbyshire based Accounting &#038; Business Advisory<\/strong><\/a>\u00a0can assist on\u00a0<strong>0114 266 4432<\/strong>\u00a0or\u00a0<a href=\"mailto:info@smh.group\"><strong>info@smh.group<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In July, the government was reported as holding talks on abolishing inheritance tax (IHT). This wasn\u2019t given much credence at the time, but there are now reports that the March 2024 Budget will include a reduction to the 40% IHT rate as a prelude to future abolishment.<\/p>\n","protected":false},"author":4,"featured_media":16788,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[3],"tags":[199,35,83,98,21,13],"class_list":["post-25330","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-smh-accounting-business-advisory","tag-accountancy","tag-business","tag-chartered-accountants","tag-financial-advice","tag-income-tax","tag-inheritance-tax"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.9 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Farewell to inheritance tax? - SMH Group<\/title>\n<meta name=\"description\" content=\"In July, the government was reported as holding talks on abolishing inheritance tax (IHT). 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