Is IHT next for U-turn as revenue drops for first time in a decade?
Revenues from Inheritance tax (IHT) receipts fell for the first time in a decade in 2019/20 in the UK, a point that could prompt another UK government U-turn, according to commentators.
According to government statistics, HMRC raked in £5.2 billion from IHT in 2019/20, down 4% (£223 million) compared to the previous tax year, partially thanks to the introduction of the main residence nil-rate band in 2017/18.
As a result, Tom Selby, senior analyst at AJ Bell, IHT could be in Chancellor Rishi Sunak's cross-hairs ahead of Autumn Budget, as the current UK chancellor looks for quick-fix solutions to help pay for the gargantuan covid-19 borrowing
After a decade of rising IHT bills, the amount people paid in tax on death dropped £223m last year but despite this year-on-year fall, IHT charges still boosted the Treasury's coffers to the tune of £5.2bn in 2019/20.
Residence nil-rate
"The primary reason for the recent decrease in both the proportion of people hit by IHT and the overall tax bill was the introduction of the main residence nil-rate band in 2017/18," said Selby, pictured left.
"This meant that, in addition to the main £325,000 per person IHT-free allowance, people could pass on their primary home to a ‘direct descendant' without paying tax on the first £100,000.
"This main residence nil-rate band has increased by £25,000 each year since 2017/18, reaching £175,000 at the start of the current tax year. It is due to rise in line with Consumer Prices Index (CPI) inflation from 2021/22 onwards."
Selby points that aim of the policy - announced with huge fanfare by former Chancellor George Osborne - was to allow family homes worth up to £1m to be inherited tax-free. This can be achieved by a couple combining their IHT allowances.
Debts
"However, given the parlous state of the nation's finances, it would be no surprise to see Osborne's big IHT giveaway come under the microscope as his successor, Rishi Sunak, seeks ways to raise much-needed cash to pay for the nation's eye watering covid-19 debts."
by Tanya at http://www.ifajobs.net
Daniel van Niekerk
Welcome to Prestige IFA Jobs, the premier international wealth management recruitment service. Since our establishment in 2016, we have earned a reputation as the go-to choice for discerning international wealth management and investment advisory firms around the world. At Prestige IFA Jobs, we redefine the art of headhunting in our industry. We stand unrivaled, leading the way with our unique approach and unmatched expertise. No one does what we do quite like us. Our commitment goes beyond simply matching a qualified candidate with a good IFA firm. We believe in finding the perfect synergy between candidate and company. With our extensive background in personal financial advisory across multiple countries, we take the time to deeply understand our candidates and our clients. So, when things go wrong, don't go wrong with them...because the successful warrior is the average man, but with laser focus.
