Article by Phil
The value of Inheritance Tax (IHT) is on the rise, leading to more demand for Inheritance Tax Advice.
Over £2.2 billion was collected in the last three months. That’s 6% higher than last year. The tax is expected to top £9 billion this financial year. This is tax on the value of your assets of course. Assets you’ve already paid tax on in order to generate them in the first place of course.
More than £500,000 in IHT is now being collected on nearly 10% of estates.
This is only going to increase with the government set to introduce inheritance tax on the value of pensions as well. This is expected to raise £1.5 billion extra a year. The government says it will add an average of £35,000 to IHT bills. But it will bring many more estates into the inheritance tax trap. An extra 10,000 according to the governments estimates but most think it will be far more than that.
Inheritance Tax Adviser worried about changes
The proposed changes have certainly worried many Inheritance Tax Advisers. Advisers are concerned about the potential delays to beneficiaries receiving their inheritance after the death of a loved one. Especially the much-needed pension element. Delays are bound to happen when pension providers will need to liase with executors over potential tax liabilities. This could bring real financial hardship to thousands of families.
Alternatives have been proposed by the Inheritance Tax Advice industry including:
- Taxing pension income over time rather than on death especially for dependents.
- Applying a flat rate of tax on the value of a pension within an agreed financial threshold.
It remains to be seen if the Chancellor will take any notice.
Capital Gains Tax drops by 13%
Whilst IHT is on the up, Capital Gains Tax (CGT) is dropping. In the six months to June CGT fell by 13%, down to £11.7 billion. This is a massive decrease on the same period in 2023 when £17 billion in CGT was paid. Is this a result of the governments increase in CGT rates? Perhaps it’s too early to say. But it wouldn’t be the first time an increase in tax rates has led to less tax being collected. There is a point at which wealthy individuals start to baulk at paying tax and look to mitigate their taxes, or even just leave the country. It’s a dangerous game.
Non-Doms pay £12 billion
That’s how much the non-dom taxpayers paid in 2024, according to HMRC. These are the wealthy individuals who come to live in the UK but who earn their money elsewhere. They have become a political hot potato in recent years with all political parties saying they would increase their tax rates. In 2024 there were just over 80,000 people categorized as non-doms for tax purposes. However, that number was 1% down on the year before. The big question is how many have left since the tax rise imposed by the Conservatives and reinforced by Labour start to bite. We won’t know that for another year or say but most commentators think the numbers will have fallen substantially. Especially since over 1000 millionaires have already left the UK in the last year. With £12 billion in tax on the line this could be very bad news for the government.
Another reason to take Inheritance Tax Advice. The government is looking for new ways to replace the lost taxes.
Get more information.
For more information about Inheritance Tax Advice, why not contact Christina today. We offer a free initial meeting to discuss your requirements and explain how our service works. You are under no obligation to use us after that if you don’t want to and we won’t pester you.
So why not call us today on 01282 614444 or e mail us enquiries@ccfps.co.uk or use our contact form online.
