A recent study found that just 45 per cent of people who are gifting assets or large sums of money understand inheritance tax (IHT) rules.Continue reading
The families are facing extra death duties because overdue IHT carries interest rates higher than three per cent.Continue reading
The number of over-45s seeking estate planning advice has risen sharply in the past year as many struggle to understand inheritance tax (IHT) rules, research has shown.Continue reading
Inheritance tax payments have increased by more than £1 billion since 2014/15, new figures reveal.Continue reading
The Government are considering backing down on a proposed change to probate fees which has been labelled as the ‘stealth death tax’ on top of existing inheritance levies following heavy criticism from the House of Lords.
The proposals would have meant that estates worth £2 million or more would pay £6,000 in probate fees, up from the current rate of £215.
Other estates will also have to pay significantly more under the proposed changes, the probate fees for an estate of £500,000 would increase to £2,500. However, estates, worth less than £50,000 will pay nothing.
These increases would still be a reduction on earlier planned changes which were scrapped that would have seen a tax bill of around £20,000 for large estates.
The Government claim that the changes were necessary to fund the court’s system and were a “fair and more progressive” way of paying. It estimated the move would raise £185m a year by 2022/23.
However, Lords have said that higher charges would constitute an abuse of fee levying power as the increased fees substantially exceed the cost involved in making grants of probate.
They also argued that the fees are essentially a tax, which should only be introduced, if at all, by an act of Parliament.
The Lords voted in favour of a motion to regret the proposed changes. This doesn’t actually stop the Government’s plans, but it allows Lords to put their dissent on the record.
However, experts have suggested the Government could back down on its proposals, as they did previously, although the new fees could still be pushed through or altered and reintroduced at a later date.
The Office of Tax Simplification (OTS) has found that the tax gap for inheritance tax is £600 million a year despite a steady increase in receipts seen by HM Revenue & Customs.
Last week they released the first report on the inheritance tax system. In the report, the OTS highlighted the ‘relatively high’ tax gap compared with other taxes, which it had collated from HMRC’s latest tax gap estimates for 2016/17.
Chancellor Phillip Hammond commissioned the IHT review earlier this year after revealing he was concerned about the complexity of the system.
The tax gap works out as the difference between the amount of tax HMRC expects to be paid, in theory, and what is actually paid as a result of non-compliance, simple errors, avoidance or criminal attacks on the tax system.
The gap had emerged despite IHT receipts totalling £5.2 billion during 2017/18 and then continuing to grow for the eighth year in a row in spite of the recent introduction of a nil-rate band for family homes.
Experts believe that the gap is the main driver behind the Governments keenness to reform the current system.
In its review, the OTS stated the £5.2 billion figure would cover about one week’s cost of providing UK pensions and welfare benefits in the same year.
The review also confirmed fewer than 25,000 UK estates are liable for IHT each year, compared to an average 570,000 deaths. Last year IHT forms were completed for 275,000 estates in the 2015 to 2016 tax year, more than ten times the number of estates on which the tax was paid.
A new report has called for the Government to move to a new fully digital system for inheritance tax (IHT).Continue reading
A new analysis carried out by the Office for Budget Responsibility (OBR) this week has estimated that Inheritance Tax (IHT) receipts are likely to soar to a new record high for the 2018/19 tax year.
The OBR has pointed out that, in the first six months of 2018/19, IHT receipts reached around £2.8 billion.
If things continue as they are, with an increasing number of middle-class families finding themselves liable to pay the tax, IHT receipts for the full financial year are likely to come in at around £5.4 billion – up from the £5.3 billion recorded in 2017/18, it claims.
Commentators have said that the analysis, which comes just days ahead of the Autumn Budget, will put additional pressure on Chancellor Philip Hammond to reform the IHT system when he steps up to the despatch box on Monday 29 October.
Earlier in the year, the Office of Tax Simplification (OTS) carried out a comprehensive review of Britain’s IHT framework, after the Chancellor himself said that the tax needed to be “simplified.”
Since then, little has been said about IHT and the OTS’ full report remains yet to be published.
Under existing rules, each individual can pass on up to £325,000 free of IHT. Any estates valued above this amount will then attract IHT at a rate of 40 per cent of their total value.
However, there are a number of ways that families can reduce the eventual amount of IHT they will pay, such as by making gifts, leaving money to charities in their Wills, or passing residential property to direct beneficiaries using the residence nil rate band (RNRB), which extends the amount they are able to pass on tax-free.
To find out more about how Rotherham Taylor can help with wills and probate, go to https://goo.gl/Ehsbwg
Parents who gift money to their children or grandchildren in a bid to help them get on the property ladder are being reminded to consider the complex Inheritance Tax (IHT) rules affecting gifts.Continue reading
Dying Brits are becoming an increasingly important source of finance for the tax man. Official data released earlier this month revealed that the amount paid in Inheritance Tax (IHT) recently hit a record high, breaking through the £5 billion mark for the first time as more estates were hit by the tax.Continue reading