Inheritance tax could be ‘scrapped’ as Capital Gains Tax would impact ‘Baby Boomers’ more | Personal Finance | Finance
Inheritance tax is commonly loathed by Britons, many of whom have described the levy as a “death tax”. Understandably, people will be hoping to legally avoid the tax, but more are facing its implications.
Andy Butcher, Branch Principal and Chartered Financial Planner at Raymond James, has examined the matter.
Mr Butcher highlighted the many families who are now being dragged into the inheritance tax net.
Many people previously considered this a tax on the wealthy, however, this is no longer necessarily the case.
The expert suggested inheritance tax could be scrapped entirely in favour of other options.
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It was a decision made by the former Chancellor, and current Tory leadership candidate, Rishi Sunak.
Mr Butcher continued by looking at the implications of this decision for people across the country.
He said: “By the time the frozen threshold is lifted, it’s predicted that the number of estates liable for IHT will have doubled from 2021.
“Together with a lack of financial planning, more and more families risk being caught out by a tax that can seem punitive to those that have already been taxed on their income at least once in their lives.
“Property is the pillar on which much of our current IHT rules rest.
“Yet the current tax system does little to account for the history of property prices in the UK, or the role that property so often plays in generational wealth transfer.”
The Government does not appear to have any plans to alter the inheritance tax system at present.
As a result, Mr Butcher urged people to try to limit their liabilities as much as possible.
This can be done, for example, by utilising one’s pension allowance as this falls outside of the scope of IHT.
Others may wish to make use of gifting, or setting up a trust to shelter their assets legally.
Ultimately, he said professional advice is likely to be necessary, as inheritance planing can be complicated, with no two estates the same.
