We came across another story regarding inheritance tax (IHT) the other day – part of the ongoing saga of reforms that have been in the news the past few years. It has been reported that the Conservative party have made claims that they will change the laws surrounding IHT ahead of the general election in May, the Society of Trust and Estate Practitioners (STEP) has reported. Chancellor George Osborne has stated that IHT should only be paid by the rich and the thresholds for paying IHT will therefore be raised.
This comes just after a statement from Prime Minister David Cameron, who stated in October last year that family homes – particularly those in high-price areas like London – should not be affected by the tax.
In an interview with the Sunday Times, Osborne is quoted as saying: "We believe inheritance tax is a tax that should be paid by the rich and we will set out our further approach closer to the election" – this was in response to claim from the Labour party that the Conservative Chancellor plans to increase VAT after the election in order to cover the £7 billion cut to IHT, for which there is currently no confirmed funding. Osborne further commented: "Our plans do not involve tax increases, including VAT, because our plans involve cutting public expenditure and saving on welfare budgets."
The Conservatives previously promised to increase the IHT threshold to £1 million at the 2010 general election, but they failed to attain parliamentary majority and the threshold has been frozen at 40% tax of estates worth £325,000 or over since.
In the tax year 2013-14, proceeds from IHT were £3.42 billion from 23,337 estates; if it remains unchanged the estimated number of estates affected for the tax year 2015-16 will be 43,800 as house prices continue to soar – particularly in the south east of the UK.
Do you think IHT should change, and do you think the Conservative party will stick to their promise?