Are Inheritance Tax reforms on the way? The All Party Parliamentary Group (APPG) for Inheritance & Intergenerational Fairness describes Inheritance Tax as “ripe for reform”.
The APPG, chaired by John Stevenson MP, goes on to suggest:
“Replacing the current inheritance tax regime (which combines a high flat-rate of 40% with an array of associated reliefs), with a flat-rate gift tax payable both on lifetime and death transfers. The APPG suggests a rate of 10% but accepts that policymakers should determine the appropriate rate as they have better access to the data necessary to determine the rate at which taxpayer behaviour changes. The key principle is that it should be low enough for the tax to be broadly based without the need for complex reliefs.”
“Aligned to this change, all reliefs other than spouse and charity exemptions would be abolished and the tax-free capital gains tax (CGT) uplift on death would be abolished. There would be a death allowance at a similar level to the current nil rate band to ensure that small estates not currently paying tax will remain unaffected by the changes. There would also be an annual lifetime allowance of £30,000 on lifetime gifts.”
Craig Simpson, Tax Partner at Bates Weston comments:
“The report focuses on ripping up the current IHT rule book and replacing the wealth tax with a flat rate system on lifetime gifts and on death. The proposals would also see the removal of Business and Agricultural Property Reliefs and the favourable step up to market value of assets on death for Capital Gains Tax purposes. If implemented this would change the landscape of wealth tax.”
Cassandra Graham, Tax manager at Bates Weston and member of the Chartered Institute of Taxation’s (CIOT) Owner Managed Business Committee is keen to stress that
“the Inheritance Tax reforms proposed by the APPG are only suggestions at this stage and are expected to be heavily lobbied against.”
Read the APPG report in full here. We will be keeping a close eye on developments.
