Four in 10 people fear the UK Government will increase the current 40 per cent Inheritance Tax (IHT) rate to help cover the cost of the COVID-19 pandemic.
The findings, from research by Tower Street Finance among 2,000 UK adults, revealed more than half (54 per cent) think the Government is set to hike the rate of IHT to 50 per cent, three in ten fear a rise to 60 per cent and one in seven predict it could rise to 70 per cent.
A minority, one in 33, fear the Government could even double the IHT tax rate to 80 per cent - the rate it was increased to following World War II.
Inheritance Tax is currently charged at 40 per cent on the value of an estate above the nil rate band, which is currently £325,000 for an individual.
In 2009/10 the Government received £2.4bn in Inheritance Tax. A decade later in 2019/20 that figure had more than doubled to £5.2bn. Although, IHT has never been part of the Government’s strategy to generate revenue as it only brings in less than 1% of the total tax take for the UK.
Unsurprisingly, the research shows more than four out of ten (45 per cent) don’t believe the Government should make any changes to Inheritance Tax, or the nil rate band to pay for the Coronavirus pandemic.
However, a quarter of people do think the Government should reduce the nil rate band so more estates have to pay Inheritance Tax and a further 20 per cent think the IHT rate should increase.
Tower Street Finance’s Managing Director Andrew Bartle said: “With historic high rates of Government borrowing during the pandemic it’s only a matter of time before the Chancellor is forced to announce tax rises.”
“Our research shows the majority of people are bracing themselves for an IHT rise – whether that’s a straight increase from the current 40 per cent charge or a reduction in the nil rate band, or indeed both.”
This is not the first time that changes to Inheritance Tax have been called into question. In late 2019, former Chancellor, Sajid Javid, hinted that changes could be on the way. Additionally, past Chancellor, Phillip Hammond, ordered the Office of Tax Simplifications to conduct a review of Inheritance Tax and they published two reports outlining how the tax could be simplified. The 2021 budget announcement is imminent so we may know sooner rather than later whether changes to Inheritance Tax are on the horizon.
Kings Court Trust is an award-winning probate and estate administration provider who can take care of the complicated practicalities after death, including Inheritance Tax. If you have any questions about probate or estate administration, call our experienced Client Services Team on 0300 303 9000.
We have also teamed up with Tower Street Finance to offer financial products that benefit Executors and beneficiaries. Tower Street Finance IHT Loan product helps Executors who are liable for an IHT bill. They also offer an Inheritance Advance product for beneficiaries who want to access their inheritance earlier. To find out more visit www.towerstreetfinance.co.uk or call 0343 504 7100.