Report Suggests Slashing 40% Rate And Reforming Lifetime Gifts
Inheritance tax should be completely overhauled and slashed to just 10%, a new report has recommended.
The All-Party Parliamentary Group on Inheritance Tax and Intergenerational Fairness, a cross-party group of MPs, has asked the government to consider its proposals that suggest giving everyone a tax-free limit of £30,000 each year to pass on money.
The plans, published today (29 January), also detail getting rid of most reliefs available including the 100% relief for farms and changes to capital gains tax rules.
The group says the reforms, if implemented, would encourage less tax avoidance and have higher-value estates paying more inheritance tax. John Stevenson MP, who chairs the group, said the current inheritance tax system was an “unfair penalty on hard-working savers”.
Inheritance tax experts at leading national law firm Irwin Mitchell have long called for bold reform to the system and welcome the possibilities an overhaul would bring.
Expert Opinion“The suggested reforms from the APPG are, simply put, radical and would completely change the way inheritance tax works in this country if they were to be implemented. Every single person in the UK would be affected.
“A revolutionary view of inheritance tax is exactly what is needed. For years the system has been needlessly complicated; a prime example is the introduction of the Residence Nil Rate Band (RNRB) which discriminates against those who do not own their own home, those who do not have children, and those who not married. Meanwhile, the current system is ripe for exploitation when it comes to tax avoidance and those who know what to look for.
“Rising house prices have pushed more estates into the IHT threshold, meaning people who may have never dealt with or even thought of financial planning before are introduced to a bewildering and largely inaccessible tax system. The proposals, if implemented, will massively simplify the inheritance tax process; remove reliefs that encourage tax avoidance; and restore harmony to the so-called ‘intergenerational contract’.
“It would take a bold government to accept and introduce these policies, but that is exactly what the country needs. Piecemeal reform is not enough and if the APPG has recommended these huge changes after years of work, then the government should stand up and pay attention.” Anthony Nixon - Partner