Chancellor Jeremy Hunt announced no changes to inheritance tax (IHT) receipts during his Spring Budget last week. Since the 2022/23 tax year, households will only have to pay IHT if the value of their estate exceeds the £325,000 threshold. However, soaring inflation and property prices have resulted in many Britons being affected by the “stealth” tax. So should the allowance be increased? Vote in our poll.
The IHT allowance has remained unchanged for almost two decades and was frozen until 2028 in Mr Hunt’s Autumn Statement yet many Britons are finding themselves exceeding the £325,000 threshold. Experts have cited the decision for the freeze as “stealthy”.
HM Revenue and Customs (HMRC) generated £6.4billion from IHT receipts for the 2022/23 tax year and the Office for Budget Responsibility has predicted that the Treasury will receive nearly £3billion pounds more than was previously forecast between now and 2027/28.
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Shaun Moore, a tax and financial planning expert at Quilter, explained how many Britons are being caught out by IHT. He said: “Given house prices are still yet to see the dramatic fall predicted, far more people who may not consider themselves wealthy could be caught by the IHT net as their property value has grown significantly in recent years.
“With more people facing an unwelcome – and in some cases unexpected – IHT bill, seeking professional financial advice where possible will be vital.
“IHT can be complex, particularly when it comes to the rules and restrictions of certain aspects such as the residence nil rate band, so professional support can help take the pressure off while also helping to mitigate costs through careful financial planning.”
So what do YOU think? Should inheritance tax allowance be increased? Vote in our poll and leave your thoughts in the comment section below.