There are suggestions that next week’s Budget could include changes to the current gifting and inheritance tax (IHT) regime but moves to increase the tax take - which hit a record £5.2bn last year - would face strong public opposition, according to a recent poll
A survey of over 6,000 adults commissioned by financial planning and investment management group Tilney has found that 47% do not think there should be any tax on any assets after a person dies.
This compares to 41% who believe there should be a tax on assets above a certain threshold and only 3% who believe tax should be levied on all assets in a deceased person’s estate.
Opposition to taxing any assets on death is felt most keenly by adults aged 45-54 (52%) and by women (50%). Across age groups, 18-24 year olds were the only cohort where the proportion of people in favour of taxing all assets, or assets above a threshold (42%), outweighed those opposed to levying any taxes on the estate (39%).
Of the respondents who believed there should be a tax on assets over a certain amount, a threshold of £500,000 to £599,999 was the most popular, cited by 20%, followed by over £1m (16%) - a significant leap from the current nil rate band for inheritance tax of £325,000.
Ian Dyall, head of estate planning at Tilney, said: ‘The Chancellor announced at the beginning of the year that he had asked the Office of Tax Simplification (OTS) to conduct a major review of IHT including looking at gifting allowances.
‘While I always welcome the principle of simplification, too often it leads to a new tax regime, and with Mr Hammond running out of options to generate funds for public service spending commitments, I fear next week’s Budget could turn the screw on taxing estates on death.
‘The figures from our survey suggest that any moves to increase IHT receipts under the cover of “simplification” will be an extremely unwelcome decision’.
Separately, Guildford in Surrey has been revealed as the IHT capital of the UK, with the most payments according to research by Direct Line.
The insurer’s freedom of information request to HMRC shows that 658 estates from families based in the town were subject to the tax in 2015/16, more than anywhere else in the country. On average they paid £231,000 each.
This compares with just 31 estates in Wigan in Greater Manchester. However, the largest IHT bills were paid on estates from families in West London, where the average tax paid was over £390,000.
Report by Pat Sweet
