C3Insight

Calls for the Abolition of Inheritance Tax

It has recently been revealed that HMRC collected a record £4.7bn (2015/16) in inheritance tax receipts during the transitional period before the launch of a new, generous, inheritance tax (IHT) allowance in April 2017. Reports suggest that a significant portion of those receipts stem from families who would have otherwise benefitted from the forthcoming allowance had their relatives not died during this two year transitional period, and this has renewed calls for the tax to be abolished completely.

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Budget 2015 – Number 2

During the closing phases of the recent general election campaign there seemed to be an air of desperation emanating from the Tory ranks, as David Cameron and George Osborne delivered a wide ranging assortment of commitments and pledges aimed at seducing floating voters as they battled to retain office. Such was the slapdash, and allegedly miscalculated, nature of these commitments (particularly regarding deficit reduction) that much derision, and demands for clarity, not only from the opposition, but also from independent entities such as the Institute of Fiscal Studies and the Financial Times (who complained that the party had become ‘fiscally irresponsible’) came their way.

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Deeds of Variation under Threat

For the past two decades, the beneficiaries of a deceased’s estate have been legally entitled to alter, deny or completely redirect, any legacy bestowed by the deceased, whether under a Will or intestacy. Whilst a Will, and ultimately the known wishes of the deceased are usually regarded as sacrosanct, the requirement for this kind of flexibility after death becomes especially clear in cases where a Will is deficient, out of date, unfair or even lacking in existence, as the consequences of oversights left unchanged could result in financial calamity which would, in many cases, be the opposite result of what was intended.

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Client Case Study – Family Limited Partnership

Overview

We were contacted recently by a married couple wishing to discuss the inheritance tax (“IHT”) likely to be payable on their valuable but diverse joint estate. The clients contacted us as their accountant had recently made them aware that, as their affairs stand at present, they should prepare for an IHT charge in the region of £2m, which quite understandably concerned both the clients and their family.

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