Chancellor Rachel Reeves is being urged to abolish the £175,000 residence nil-rate band in the Budget and other changes are possible
Chancellor Rachel Reeves is being urged to abolish the £175,000 residence nil-rate band in the Budget and other changes are possibleAccording to the Resolution Foundation, there is a “good case” for abolishing a rule known as the residence nil-rate band, which allows people to avoid paying tax on part or all of the value of their home when it is inherited.
There is normally no IHT to pay on the first £325,000 of your estate. On top of this, homeowners can use the residence nil-rate band to Ms Reeves has warned she will have to raise taxes in the autumn in order to fill the £22bn “black hole” in the public finances.the move would make IHT simpler, but abolishing it now would arguably be be unfair on those who have planned for many years on the basis that they will receive it.
Arun Advani, Associate Professor of Economics at the University of Warwick, said: “The benefits of these reliefs are hugely concentrated, so they are often seen as unfair. “Pension pots should be included in the value of estates at death for the purposes of inheritance tax. If we are to have an inheritance tax, it should apply evenly across all forms of wealth,” it had previously said in a paper on the topic.Inheritance tax may have to be paid after someone’s death on some gifts they have given. Gifts given less than seven years before someone passes away often attract tax.
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