Commenting on the IFS report “Reforming Inheritance Tax” published today, James Ward, head of Private Client at Kingsley Napley LLP says:
“The IFS makes an interesting point about the revenue potential from IHT. It currently stands at circa £7bn p.a. which represents less than 1% of the total UK tax take and is paid by for some 27,000 estates, mostly in London and the South East. But if the current regime remains untouched this figure will likely grow in future, even without the scenario of a significant increase in property price rises in the years ahead.
“If the Conservatives do include a promise to reduce IHT or scrap it altogether in their next manifesto therefore, the shortfall in revenue will need to be addressed somehow.
“We know the Labour party has ruled out a Wealth Tax should they come to power, however we are still in the dark on their views regarding IHT, which I’ve long said is the UK’s equivalent of a wealth tax.
“For those feeling unsettled by the current focus on the future of IHT, my advice is to carry on with well considered estate planning – nothing is likely to change in the short term and most succession plans see Inheritance Tax mitigation as one small piece of the jigsaw, with control over assets being the most important.
“By this I mean, typically my clients are more concerned with protecting their family wealth from the impact of divorce; or ensuring their family business will continue to benefit the family; or considering how best to support school fees or property purchases for grandchildren.
“These, rather than paying the taxman on death, tend to be the issues keeping my clients awake at night.”
