Despite comments by the Prime Minister that suggested inheritance tax relief before the Autumn Statement, George Osborne made no major announcements on the tax threshold in December.
With some commentators speculating that the threshold could rise to £1m, many commentators have expressed disappointment that only small concessions were offered.
“It’s a blow to many people,” explains Paul Dodsworth of Estate Planning Solutions. “With house prices increasing so much over the past couple of decades, many elderly people, through no fault of their own, are now sitting on a lot of money.”
Although there were many announcements that might sway voters in the run up to next years’ election, major changes to Death Duty were not among them. Instead, the Chancellor announced exemptions for Armed Forces personnel and emergency service workers who are killed in the line of duty.
While these changes will be warmly welcomed by soldiers and firefighters, there are growing calls for the overall threshold to change.
“Many of their children and grand-children will be struggling to get onto the housing ladder for the first time,” continues Paul. “A 40% tax on their parents’ wealth, money that might otherwise have helped them financially, is a considerable blow.”
Some newspaper commentators have reflected on the omission as further evidence of the Treasury’s financial insecurity. With pressure to reduce the deficit, raising the inheritance tax threshold would be a blow to treasury finances that many think they can afford.
“Sadly, that’s not much consolation to those affected. There are ways of minimising the amount paid on death duty, however: Trust funds, tax free gifts and the like – but the rules can be confusing. That’s where independent advice is needed.”