The Budget was due to be announced on 11 March. With the recent change of Chancellor, it has not yet been confirmed if it will still go ahead on that date, but if not, we should still have a Budget in the near future ahead of the start of the new tax year on 6 April 2020.
There is always much speculation (and sometimes quite a few leaks!) ahead of the Budget each year. This year a subject that keeps coming up is inheritance tax (IHT).
A cross-party report was issued in January proposing radical changes to IHT, including a suggested reduction in the current 40% rate to 10%. This is to be balanced by abolishing most reliefs, including business relief, agricultural property relief and potentially exempt transfers (PETS). PETS are when assets can be gifted and there is no IHT due if the donor lives for seven years from the date of the gift.
When looking at the proposals, on the face of it a reduction in the rate of IHT would seem like a tax saving, in reality, with the removal of the reliefs most would pay more IHT in future not less. This will impact business and the agricultural sectors in particular. The value of agricultural land or business may be significant but if there is no cash available to pay the IHT bill, land or business may have to be sold to meet the tax liability.
While we do not know if any of these proposals will be included in the upcoming Budget, for anyone already looking at IHT planning using the current reliefs, it may be worth considering putting the plans in place before the Budget.
If you would like any advice on this, please get in touch with Lucy Crow: firstname.lastname@example.org