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Inheritance tax changes – yawn!

Chief executive of Worldwide Financial Planning, Peter McGahan discusses potential changes in Inheritance Tax rules

The government has mooted a potential change in Inheritance Tax rules. It is being put forward as a potential election winner, but the belief is that the ‘changes’ are just to be written into a manifesto, so we are probably more likely to see ET returning, even with today’s phone systems. We just know how governments don’t follow through.

Inheritance Tax is unpopular for many reasons. Having been taxed in so many ways throughout our lives, being taxed at death is a tad boring. Do you remember when you could go to see a seriously ill relative at a hospital and didn’t have to pay a tax called parking?

Inheritance Tax is rated as the least popular tax, well below Value Added Tax (VAT), a tax where I cannot see how they add any value at all!

Inheritance Tax doesn’t really raise that much for a government. I don’t see its purpose, or motivation. It raises less than 0.5% of national revenue for OECD countries.

For many, it’s a message to lift your wealth to a certain point and stop.

In practise, the exceptionally wealthy have all the relevant trusts in place to minimise the big taxes, and most people who receive advice from their accountant, solicitor or Independent Financial Adviser can easily navigate most Inheritance charges.

Those who are caught are the people who don’t know how to navigate the rules or just don’t get around to it. If you are one of the latter, please see your relevant professional as above.

Thoughts on how Rishi Sunak might alter Inheritance Tax were put forward by one of the governments ‘think tanks’ (long sigh). They think taxing people on gifts during their lifetime over £125,000 is a good idea (long deep sigh, staring out window). No. To help an economy you don’t want to hoard assets. Families will pass money onto their children earlier if they are encouraged to do so, thus stimulating the economy further.