Inheritance Tax
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Saturday, July 6, 2019
Friday, July 5, 2019This paper gives a brief summary of the structure of inheritance tax before looking at the debates there have been about the tax in recent years.
Key Points:
- This paper gives a brief summary of the structure of inheritance tax before looking at the debates there have been about the tax in recent years.
- Inheritance tax (IHT) is levied on the value of a persons estate at the time of their death.
- [2] It is estimated that the tax was paid on 21,000 estates at death in 2017/18, representing under 4% of all deaths.
- There are some gifts which one can make in the last seven years of ones life which do not attract tax.
- By the middle years of the decade commentators were predicting that very many more families would have to make provision to pay for the tax in future, though even at this point, at the peak of the UK housing market, tax was paid on around 6% of all estates at death.
- In its agreement published after the election, the Conservative-Liberal Democrat Coalition Government made a number of tax proposals including a substantial increase in the income tax personal allowance from April 2011.
- The agreement went on to state that the new Government would further increase the personal allowance to 10,000, making real terms steps each year towards meeting this as a longer-term policy objective, and that it would prioritise this over other tax cuts, including cuts to Inheritance Tax.
- [8] In its manifesto for the 2015 General Election the Conservative Party stated that in government, we will take the family home out of tax for all but the richest by increasing the effective Inheritance Tax threshold for married couples and civil partners to 1 million, with a new transferable main residence allowance of 175,000 per person.
- The Budget report noted that, given this, the effective inheritance tax threshold will rise to 1m in 2020/21.
- [19] Notes : [1] Tax rates and allowances for 2019/20 are set out in Annex A to HM Treasury, Overview of Tax Legislation and Rates, October 2018.