A 'relatively easy' change for the Government is to tighten up IHT gifting rules such as the seven-year rule
A 'relatively easy' change for the Government is to tighten up IHT gifting rules such as the seven-year ruleThe standard inheritance tax rate is 40 per cent and is only charged on the part of the estate that’s above the threshold.
It means individuals can pass on a total of £500,000 without paying IHT. Couples can share their allowances, so with these pooled, couples end up being able to pass on a maximum of £1m tax-free. ‘The Chancellor might just get rid of the RNRB altogether, with the possible sweetener of raising the main NRB by a token amount to something like £350,000 or £400,000 – although it’s not clear how much would be raised by this combination of steps.
“That’s not just because the assets will leave the estate altogether if the giver is still alive after seven years, but also because after two years there is a chance the gift could be entitled to taper relief, where the IHT rate falls to as low as 8 per cent.” Some believe that many family-owned firms would have to be sold, liquidated or broken up if IHT was imposed in full. Others argue that these reliefs are exploited by wealthy families simply to avoid IHT.
However, Reeves could reduce or cap the relief for agricultural or business property or tighten the criteria to make it more difficult to claim.This means that substantial sums can be passed on free of IHT, and beneficiaries can receive withdrawals from pension pots free of income tax if the death occurs before age 75.
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