Conservatives Retrace Their Steps on Inheritance Tax Pledge
Inheritance tax has been in the media spotlight once again as confusion arose regarding the Conservative Party’s pledge to raise the nil-rate band (currently £312,000) to £1M, meaning only millionaires resident in the UK would be eligible to pay the tax. A recent interview with shadow business secretary Kenneth Clarke, implied the ‘raising of the bar’ was no longer high on the Tory agenda, however, it now appears that this is not the case and raising the nil-rate band is, in fact still high on the Tory agenda.1
Inheritance tax was introduced (in its current form) in 1986 and was designed to target only the very wealthy. However, due to the massive increase in house prices over the last decade, considerably more people have assets which are over and above the inheritance tax threshold. At the time of writing, the average house prices in Greater London, Buckinghamshire and Surrey are above the current £312,000 threshold.2
The nil-rate band has increased considerably over recent years, however it has not increased inline with either inflation or rising house prices, which has meant those having to pay inheritance tax has more than doubled since Labour came to power in 1997. This has lead to growing unpopularity of the tax over recent years and has been described by many as a ‘stealth tax’.
Opposition parties claim that raising the nil-rate band of inheritance tax to £1M will free only a minority of UK residents from this controversial tax burden, namely those whose estates are valued between £312,000 and £1,000,000. A recent article claims that just 3% of estates are valued above the nil-rate band and therefore eligible to pay inheritance tax.3
It remains to be seen exactly what will happen to inheritance tax in the next couple of years, but the reality remains, an ever growing number of estates will be valued higher than the current nil-rate band and therefore inheritance tax will payable in many more cases. In spite of this, the best advice regarding inheritance tax is to ensure one has a proper Will drafted AND to seek professional advice from an established Will writing firm when drafting a Will.
A spokesperson from Trust Inheritance commented:
“Regardless of whether the nil-band rate of IHT stays the same or rises to £1M, or if IHT disappears altogether, one should always ensure they have a professionally drafted Will. Also, one should review their Will every 5 years or so as their personal circumstances can change considerably in the same way government policies can change.”
Trust Inheritance are specialists in estate planning & Will drafting and have helped many people across the U.K to reduce the burden of inheritance tax. To find out more about the range of services they offer, visit: http://www.trustinheritance.com.
Notes for Editors:
1- http://www.guardian.co.uk/politics/2009/mar/24/conservatives-inheritance-tax
2- http://news.bbc.co.uk/1/shared/spl/hi/in_depth/uk_house_prices/html/houses.stm
3- http://www.citywire.co.uk/personal/-/news/money-property-and-tax/content.aspx?ID=334060