Inheritance Tax Rethinking by UK Government
According to the current UK Chancellor, Sajid Javid, an Inheritance Tax Rethinking by UK government is possible. He has indicated that the Government which is a conservative government favours changes or may even get rid of the inheritance tax regime.
This statement was made in one of Mr Javid’s final policy announcements before the UK elections we called and indicated that he was considering reforms to inheritance tax policy currently in the UK.
When asked would the UK Government repeal an inheritance tax? The UK Chancellor said that “sensible changes have already been made, but it’s something on my mind”.
He also acknowledged the criticism from those who see inheritance tax as double taxation. In that gains or income taxed during one’s life and then again on death.
Inheritance Tax Rules in the UK
At this moment in time under the UK’s inheritance framework. Tax is dues on the value of a person’s estate that is above £325,000. The only amounts that go beyond this threshold are exempt should it be left to a spouse, partner, community amateur sports club or charity.
Also, there is an increased threshold that applies where the deceased gives their home to their children or grandchildren. This includes adopted, fostered or stepchildren and the threshold is £475,000.
In the 2016/17 Tax year, only 4.6% of UK deaths resulted in an inheritance tax charge. The UK took in £5.4bn in the 2018/19 tax year from inheritance tax which is a 3% year-on-year increase.
December 12 Elections
Changes to inheritance regime could have been added in the pre-election budget that had been scheduled to come out on the 6th Nov 2019. Mr Javid was forced to cancel the budget however with the UK parliament being dissolved on the same date.
Mr Javid had described the budget as something to “shape the economy for the future” but has been criticized by Shadow Chancellor John McDonnell. He believed the move to be “an electioneering stunt rather than a budget to rebuild our stalling economy and reset the direction of our country.”
The elections will tell us if the Conservative Party will return to power. Either through a parliamentary majority or a coalition government.
Should they achieve a majority, tax reforms could be on the cards very soon. If a hung parliament happens, this may result in a slow down or stop once again.
The Conservatives have said they plan to play their cards close to their chest while others make their election pledges. The party will release their manifesto two weeks before the elections to outmanoeuvre their rivals.
Both Labour and the Conservatives have given little away in the area of tax policy with both parties looking to win the minds & hearts of the voters with promises of increased public spending.
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