Govt set for inheritance tax ‘raid’ to raise half a billion pounds
Jeremy Hunt, the Chancellor of the Exchequer, is set to carry out a “stealth raid” on inheritance tax (IHT) in order to shore up the public finances.
According to reports in the Financial Times, the Chancellor is planning to freeze the nil rate band for the levy from 2025-26 to 2027-28.
The nil rate band is the threshold below which estates do not pay IHT. At the moment, it is set at £325,000 for individuals.
The idea is that by freezing the band at this level, increasing numbers of estates will be dragged into having to pay inheritance tax as a result of increases to the value of other assets, such as housing. The Treasury believes the move could raise as much as half a billion pounds, according to the reports.
Hunt is due to deliver the Autumn Statement on 17 November, when he will outline additional measures to improve the state of the public finances. It is understood that he will be adopting a similar tactic towards the tax-free thresholds in place for income, pensions and capital gains.
Act now to address inheritance tax bill
Families who may be impacted by any changes to the inheritance tax setup have been urged to act now in order to mitigate the burden by the deVere Group, a leading wealth management firm.
James Green, director of the compahy, described the mooted changes as a “stealth raid”, with the tax no longer a concern solely for the “super wealthy”.
He continued: “It’s impacting more and more middle-class families whose main asset is their family home.”
He noted strategies like holding properties as ‘tenants in common’ with a spouse, making use of gift allowance and establishing trusts are likely to become more common as a result.
Green added: “There are legitimate solutions to limit the amount your loved ones may potentially face due to Jeremy Hunt’s anticipated sly tax hike for families. The key is to act sooner rather than later.
“Without taking steps to mitigate the inheritance tax burden, unsuspecting bereaved families might end up with a huge, unmanageable tax bill.”
In September, YourMoney.com reported that, over the summer, the receipts for IHT to HMRC had risen to £2.9bn.