May 14, 2015

Election result clears the way for Inheritance Tax reform

The Conservative Party had included a commitment in their manifesto to increase the threshold from £325,000 to £1million.

The Tories had fought the 2010 election making a similar pledge, but the proposals were dropped after David Cameron signed a coalition agreement with the Liberal Democrats.

Now after securing an overall majority, the Prime Minister has the authority to implement the changes.

Outlining why he thought an overhaul was important, Mr Cameron said: “You want to know that even after you’re gone, when you’re not on the phone and not physically there, you can still provide for [your children].

“That wish to pass something on is about the most basic, human and natural instinct there is. And that’s why for a long, long time I have wanted to act on inheritance.”

The news has been well received by those who have argued that IHT – first introduced in 1986 and originally aimed at Britain’s wealthiest residents – was in urgent need of reform.

Critics were concerned that the rising cost of house prices meant that an increasingly large number of families with modest-sized estates were being stung by the 40 per cent levy.

Once the threshold is raised, there will be clear implications for estate planning, as only the largest will still be eligible to pay the tax.

Although opposition parties previously described the commitment as unfunded, ministers have said that they will fund the new arrangements by removing the top rate of pension tax relief.

At Royds, our private client team can provide specialist advice to individuals regarding protection of wealth and assets for future including the benefits of lifetime gifting, inheritance tax mitigation, long term care funding solutions and effective estate planning.

For more information please contact Tony Millson.

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