Inheritance tax is commonly loathed by Britons, with many wanting to see the back of the levy. It is set at 40 percent, levied above a particular threshold, typically above £325,000.
During her leadership bid in the summer, now-Prime Minister Liz Truss acknowledged the resentment many people have when it comes to inheritance tax.
She promised a review of the levy if she secured the keys to Number 10, and now all eyes are on Ms Truss to see if and when she carries through.
However, given property prices are now generally falling, Mr Hunt has warned some taxes may need to go up.
According to experts, this may be the perfect opportunity for the Chancellor to have inheritance tax reform “in his sights” to achieve the same tax take, or even increase it in future.
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“Whether the new Chancellor decides to tamper with the current regime or not, those whose estates will be liable for IHT should double down on their planning.”
There are certain instances where inheritance tax can be avoided by Britons, and many people will want to know how to legally avoid liability.
There is typically no IHT to pay if either:
- The value of an estate is below the £325,000 threshold
- A person leaves everything above the £325,000 threshold to their spouse, civil partner, charity or community amateur sports club.
Those who give their home away to their children or grandchildren can potentially increase their threshold to £500,000.
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Homes can also be passed to a husband, wife or civil partner when a person dies, without IHT being liable.
However, leaving the home to another person in one’s will means it will count towards the value of the estate.
Inheritance tax will only be charged on the part of a person’s estate above the threshold.
For example, if an estate is worth £500,000, and a tax-free threshold is £325,000.
In this case, inheritance tax charged will be at 40 percent of £175,000 – which is £500,000 minus £325,000.
But what do Britons want to see happen with the current approach to inheritance tax, and should it be scrapped altogether?
Mr Ward added: “At least with IHT it’s a case of better the devil you know.
“Many of the clients I speak to take the view that abolishing it entirely would only enhance the prospect of a wealth tax under an incoming Labour Government.
“IHT remains a tax where planning is possible to mitigate liabilities due.”