Inheritance tax labelled ‘unfair’ and ‘cruel’ by expert
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With Inheritance Tax reciepts increasing £0.5 billion year on year, 33 percent more than this period last year, more and more people are having to pay more than they could have ever expected. This comes as no surprise as the rise in house prices, and the rise in the investment markets have meant an increase in the volume and value of estates caught in the inheritance tax net.
Nick Ritchie, Director of Wealth Planning at RBC Wealth Management commented on the £0.5bn year-on-year increase in IHT receipts.
He said: “Individuals might wish to consider implementing their wealth transfer strategy sooner amid current, tried and tested rules, rather than risk being caught out by stricter rules in the future.
“Many individuals have brought forward their plans to gift to the next generation amid mortality fears fuelled by the pandemic.
“There have also been concerns over how the Chancellor might target larger estates in the future.
Many individuals have brought forward their plans to gifting amid mortality fears due to COVID-19 (Image: GETTY)
“One thing is for certain, at just 0.6 percent of the 19/20 tax take and with an IHT rate of 40 percent, already among the highest of the OECD countries, targeting IHT won’t be the silver bullet to recouping the swelling deficit.
“Increasing the rate of Inheritance Tax seems unlikely.
“But enhancing receipts by removing or reducing reliefs, targeting lifetime gifts or removing the generous capital gain exemption on death, could have a part to play.
HMRC released updated Inheritance Tax statistics today which showed the Government continues to collect more from the tax.
Inheritance Tax receipts are £500million higher than this time last year.
With the mortality rate increasing due to the pandemic more families have been unexpectedly hit with this tax.
With Inheritance Tax becoming a bigger source of income for the Treasury, planning one’s wealth transfer strategy sooner is a sure fire way to ensure families pay less.
The majority of this increase could be explained by the increase of wealth transfers during the pandemic.
With house prices increasing, many of the deceased estates were subject to Inheritance Tax (Image: GETTY)
Many victims of COVID-19 may not have been able to successfully partake in effective inheritance tax planning during their lifetime.
With house prices increasing, many of the deceased estates were subject to Inheritance Tax.
So, with Chancellor Sunak freezing the nil rate band until 2026, it’s highly likely that this trend will continue.
To ensure the transfer of wealth is done in a tax efficient way, it’s important for people to take advice as early as possible to maximise their opportunities.
Each person can start by writing or reviewing their Wills.
This will ensure it makes best effect of current and future tax situations.
This can done through setting up tax planning structures.
This is effective as it helps to protect and preserve family wealth.