Synopsis: PM indicates a belief that IHT should only apply to “the very wealthy”
Date posted: Wednesday, October 15, 2014
The FT has reported that the PM has stated that inheritance tax (IHT) should only be paid by the ‘very wealthy’. He references the transferable nil rate band and how this can mean that married couples can leave up to £650,000 to the next generation but, critically, that he ‘wants to go further”.
So there has been no specific reference to a £1m nil rate band but, given what was part of Tory policy back in 2007 but dropped with the advent of the coalition in 2010, it’s not surprising that some will be taking the latest statement of aspirations as having a £1m nil rate band at its heart.
There are clearly economic challenges (in the shape of the tax loss any increase to the nil rate band will result in) but it seems that the conservatives are sufficiently confident in their good reputation as prudent economists with a strong level of competence to take that risk in pursuing a philosophical ambition.
Given the history of such aspirations advisers will no doubt sound a note of caution to any clients seeking to defer any IHT planning in the light of this latest statement of aspiration for all of its lack of a mention of a specific new increased nil rate band …let alone any reference to timing of course the conservative manifesto may have more detail.
At the very least for those who would plan differently if the nil rate band were significantly increased they could consider planning that could be (substantially) “unwound” eg a loan trust. An even easier alternative might be to effect appropriate term assurance to provide cover for the liability that will remain un-reduced until a planning strategy is decided on.
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