In February 2018 we were told there would be an Inheritance Tax simplification review announced in the Autumn Budget. It didn’t materialise at that time but there seems to be some progress. The review was split into two, the first report covered administration and was released in November 2018 and the report on the tax element was released in July 2019.
With so much going on in the world with Brexit, Trade Wars etc., it is unlikely there will be any action on the proposals this year, but it is possible that there will be some mention in the Spring Statement of 2020.
Below is an overview of the main elements that we think are most relevant from the tax report of the review in July this year:
1. Lifetime gifts
a. Gift exemptions
- Combination of all £3,000 annual gift and marriage gifts into one overall “personal gifts allowance”. It is suggested this should be increased with backdated inflation to approximately £12,000 per annum
- Review of the small annual gifting allowances
- Gifts from income to be set at a percentage of income or a set monetary amount and the required “regular” element removed
b. Gifting period
- Reduce seven-year period to five years
- Scrap the 14-year rule
- Abolish taper relief
C. Payment and Nil Rate Band
- Clarify who is liable for Inheritance Tax gifts
- Clarify the cation of Nill Rate Band gifts
2. Capital Gains Tax
- Make Capital Gains Tax payable after the h of asset holder – liability transferred to the owner
- Death benefits from term policies should be free of IHT, even if not in trust
If you would like to read the finer details you can do so here. Happy reading!
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