“In this world nothing can be said to be certain, except death and taxes.” – Benjamin Franklin
The 2015 general election is fast approaching and so the Labour Party, Conservatives, and Liberal Democrats, along with UKIP and the other parties, are battling it out to secure the nation’s votes. One of the main focuses, and a pledge that the Conservative Party have recently raised again, is regarding the issue of Inheritance Tax.
In 2007 the Conservatives announced to delegates that they would raise the threshold at the time from £300,000 to £1 million. However the economic crisis developed and with that house prices decreased and the matter was quickly put to rest. The issue was raised again in the 2010 manifesto, however the Liberal Democrats were opposed to any increase.
Prime Minister David Cameron recently spoke about the issue during a recent House of Commons debate. By raising the current threshold to £1 million, it would really only affect the very wealthy; something many hardworking Brits would welcome. How taxes are spent has become a thought provoking and debatable matter over the last few years. From a professional point of view and having to give suitable advice, how do you feel regarding this issue? Can we really believe the Government given past promises they have failed to honour?
As a wills and probate professional you are no doubt asked questions relating to inheritance tax from clients frequently. The main concern clients may have is how their wealth would be affected by any changes and what can they do about securing their finances for the future. Advising clientele on such matters as their finances should be dealt with appropriately, as house prices and assets have risen considerably over the years, especially regionally with London at the forefront of the boom. No wills and probate professional wants to be responsible for giving bad or incorrect advice, something that unfortunately does happen in this industry. Reputation is paramount and any firm with such stigma attached is unlikely recover successfully.
Latest figures
In 2011/12, around 19,000 estates incurred inheritance tax (IHT), which is around 3% of all deaths. Freezing the threshold above which the tax applies will increase the annual total by an estimated 5,000, meaning that IHT will affect in the region of 4% of estates each year. The number of estates being charged inheritance tax is predicted to rise from 26,337 in 2013-14 to 43,800 in 2015-16.
So what does this mean for your clients? Inevitably house prices will increase year on year so personal assets will rise and clients should become wealthier – no complaints there. However, upon death, ultimately, should the current threshold of £325,000 remain, it is reported that one in ten estates will be paying inheritance tax by 2018.
What are your views on the issue of Inheritance Tax? Is your business prepared for any upcoming changes and how this would affect your clients?
