Call for compensation for inheritance tax allowance delay
Campaigners are calling for compensation for families who pay inheritance tax (IHT) between April 2015 and April 2017 that could later have been avoided. This is because of a two-year delay in implementing a new IHT-free allowance.
The new family home allowance was announced in the 2015 budget, but will not begin to be phased in until April 2017. It is intended to benefit people who bequeath their home to their direct descendants. The allowance will start at an extra £100,000 per person in the 2017/18 tax year and rise to an extra £175,000 by 2020. These figures ‘top up’ the standard £325,000 threshold on all assets, above which an individual is taxed at 40 per cent. The government will taper the new tax relief away for estates worth more than £2 million.
Analysis commissioned by the Daily Telegraph suggests that around 28,000 families will pay up to £80,000 in IHT between April 2015 and April 2017, some of which they could have avoided paying if the family home allowance was already in place.
Campaigners claim the delay in implementing the allowance is unfair because it penalises some people for dying before others. They are calling for the rules to be applied retrospectively from the date they were announced.
In the context of the family home allowance ‘direct descendants’ can include children, grandchildren, step-children, adopted or foster children and in some cases the spouse or civil partner of a direct descendant.
In the 2015/16 tax year, a record number of families paid IHT amounting to £4.7 billion, a 20 per cent rise from the previous year.
Reduce your inheritance tax (IHT) liabilities
With careful planning and a well-drafted will it is possible to take advantage of inheritance tax reliefs to mitigate your inheritance tax liability.
For expert advice on estate-planning and to maximise any tax-saving opportunities please contact one of our specialist wills and probate solicitors:
- Jonathan Midgley 01424 730945
- Gordon Howard-Smith 01424 438011
- Antony Caulfield 01323 435 900
- Richard Ostle 01424 730 945
- Cara Sheppard 01424 730 945
Posted: 29 July 2016
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