Could the deficit and rising inheritances accelerate IHT change?
With the largest ever peacetime deficit on our hands, thanks to the pandemic, and an aged Inheritance Tax regime firmly on the government’s radar, could this combination lead to unwelcome tax rises on transfers of wealth? iewed by some economists as a way to generate revenue without inhibiting the economy, whilst also improving social mobility, the Institute for Fiscal Studies have been exploring two ‘i’s’ – inheritance and inequality.
Heightening inequality
Their spring 2021 paper, entitled ‘Inheritance and inequality over the life cycle: what will they mean for younger generations?’, pinpoints trends likely to influence policymakers’ thinking, with one key finding highlighting that inheritances have formed a rising proportion of national income for the past fifty years. Inheritances for those born in the 1960s will on average equal 9% of their other lifetime income, compared with 16% for those born in the 1980s. A continuation of this trend will see a widening of the gap between rich and poor families.
With social levelling-up prominent on a cash-strapped government’s agenda, IHT changes could prove costly for the wealthy. Taking expert advice and preparing for all scenarios is wise.
It is important to take professional advice before making any decision relating to your personal finances. Information within this page is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK.
Equity release will reduce the value of your estate and can affect your eligibility for means tested benefits.
Tax and Estate planning are not regulated by the Financial Conduct Authority
The value of pensions and investments can fall as well as rise. You may get back less than you invested.
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