Budget 2021: Inheritance Tax frozen until 2026
Chancellor Rishi Sunak has announced that there will be no rises in inheritance tax until 2026, in the March Budget….More
New research by Weatherbys Private Bank has revealed that wealthy families could be hit with an unnecessary inheritance tax (IHT) bill by failing to deal with ‘liquid wealth’.
The report found that almost half of the money tied up in IHT-paying estates worth £1 million or more was in cash or invested in assets such as shares in 2017-18, totalling £1.2 billion.
Individuals are given an IHT allowance of £325,000 before paying tax on their estate when they pass away, which can be supplemented by a £175,000 allowance for a homeowner’s main residence, boosting the threshold to £500,000.
This wealth can be passed on tax-free, but a lack of planning around the inheritance of shares or cash means beneficiaries can end up paying more tax unnecessarily.
Inheritance tax looks set to be overhauled in the March budget, reportedly being considered by the Chancellor to offset the spend of the UK’s national coronavirus response, currently standing at £280bn.
Debbie Wilson, a director at accountancy Hillier Hopkins, says:
“Currently, inheritance tax rules allow you to make a gift of any size to friends and family members without incurring any inheritance tax liabilities if you live for a further seven years.
“Reform has long been suggested, with the Office for Tax Simplification looking at the current regime.
“We can expect change in 2021, perhaps with an immediate IHT charge on such gifts. It would be an easy change to make, facing limited opposition and could quickly be introduced.”