• March 28, 2024
 Autumn Statement 2014 – what wills and probate professionals need to know

Autumn Statement 2014 – what wills and probate professionals need to know

Last week brought a few welcome changes for the wills and probate industry, with taxing alterations being applied to ISAs, pensions and trusts. What does this mean for probate professionals and are there any stipulations or financial implications for clients?

Previously when a person died, their spouse was unable to inherit the tax-free benefits of an ISA. This even applied to accounts in which each spouse made contributions. This had reportedly affected around 150,000 who missed out on any potential tax gains.

George Osborne announced in last week’s Autumn Statement that the owner of an ISA can now pass on the tax allowance to their spouse or civil partner. This new legislation has been enforced as of 3rd December 2014, but allowances will only take effect as of 6th April 2015.

This raises questions as to what will happen to the assets during probate. Though allowances are inherited automatically, the amount gained within the account may not be transferred to the spouse, and be left to another beneficiary. This means that any assets left in the account while probate is being handled could have any gains taxed. The Government are said to be in discussion about how long ISAs can remain open after death.

It is advised that if benefactors currently have an ISA, whether it be cash or stocks and shares, clear directives on what will happen the assets will need to be stated within their will.

In last year’s Autumn Statement, there were plans to shift inheritance tax (IHT), with a single nil-rate band being applied to multiple trusts held by each person. As it stands, a person can set up an unlimited amount of trusts over time and in some instances, multiple IHT nil-rate bands at £325,000 can be applied.

It’s been confirmed that the government will not introduce any changes to the nil-rate band system. However new rules will be introduced to detract tax avoidance through multiple trusts and the way in which IHT is worked out with regards to trusts will be simplified.

Wills and probate professionals will need to remain abreast of any legislative additions within the Financial Bill 2015. Draft clauses are to be published tomorrow (10th December 2014) with the consultation remaining open until 4th February 2015.

Additional changes you will need to be aware of include the death tax on pensions being abolished. The 55% tax rate will no longer be applied and consumers are now able to inherit their deceased spouse’s pension, tax-free.

 

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