This year, national headlines suggested that the UK Government was considering getting rid of Inheritance Tax, with the aim of appealing to specific voters hit hard by the mandatory levy.
Throughout the year, financial experts have debated whether this is likely to occur, as the tax provides considerable revenue for the government.
Inheritance Tax (IHT) must be paid on a person’s estate after they pass away if its value exceeds a set amount (the nil rate band). UK savers with concerns about the potential size of their Inheritance Tax bill often take financial advice in Chester, Sheffield, and other cities. Wealth managers help their clients to anticipate costs with expert calculations, before assisting them in mitigating their final bill through tax efficient methods.
Government statistics show that receipts from Inheritance Tax have close to doubled over the past decade to more than £7 billion. This growth has been facilitated by the nil-rate band being capped at £325,000 since 2009, and rampant inflation in recent years.
Considering the current condition of government finances, if the tax was to be axed, compensating for the loss of revenue would mean adding around 1 penny extra onto the basic income tax rate, or 4 pence onto the higher tax rate. As an alternative, standard VAT rate would need to increase by 21%. As more people would be impacted by such changes, it is likely for political reasons that Inheritance Tax will continue.
For expert advice on IHT, call us now at Hartey Wealth Management.