Inheritance Tax: Hold Your Breath!
- AuthorPaul Hajek
The payment on death of Inheritance Tax has undergone significant changes in the last couple of years.
Interestingly, Inheritance Tax becomes one of the main focuses of attention in Party Conference season.
The Conservatives stole a march on the Government last year, when they announced that would allow the unused tax exemption on the death of the first spouse to be available on the death of the second spouse.
Previously, the only way to mitigate the full payment on Inheritance Tax on the death of the surviving spouse was to employ expensive and complicated trusts utilising the then so called “Nil Rate Band Discretionary Trust.”
Well, lo and behold, the Labour Government thought that they might be seen as an unnecessarily punitive taxing government, especially when more of Gordon Brown’s “hard working “families were caught in the Inheritance Tax trap, and copied the Conservative’s plan.
Now, the present rules are that, Inheritance Tax is levied on a person's estate and is payable on all assets over and above the Inheritance Tax threshold (currently £325,000) at 40%.
However, for married couples or civil partnerships, if the first person dies without using their £325000 allowance, the surviving partner may use both allowances on their death, and Inheritance Tax will only be paid on assets over and above £650,000.
The Conservatives, had prior to Conservative Party Conference yesterday, heralded a further change to Inheritance Tax, once they were in power, by taking out everyone other than literally millionaires. The threshold would be increased to a £1,000,000.
Yesterday’s announcement by the Shadow Chancellor, George Osborne, appeared to suggest that the alteration in the exemption in Inheritance Tax would not be a priority.
Political speak with the effect that these changes may not be introduced in the next Parliament.
As, the title to this post alludes, if you wish to save on Inheritance Tax: Hold your Breath!