Heard of the Report by APPGIIF?
The All-Party Parliamentary Group for Inheritance & Intergenerational Fairness has published a report which recommends the abolition of the existing system of Inheritance Tax (“IHT”), replacing it with a new regime which will simplify the tax rules and address so-called unfairness and complexity in the current system.
There is no doubt the existing rules are complicated.
One central proposal is to replace the tax rates on both lifetime transfers and death transfers of wealth with a flat rate of 10%.
The death rate is recommended to increase to 20% where the amount of taxable estate is above £2 million.
Currently the death rate of IHT is 40% on estates valued above the available Nil Rate Band(s).
Very worrying is the proposal that Business Property Relief and Agricultural Property Relief should both be abolished, and that the “7 year rule” to potentially exempt many transfers of wealth during lifetime should be ditched.
Other proposals that would have serious ramifications are:-
- the ending of the Capital Gains Tax uplift when a person dies, meaning assets with accumulated but unrealised gains may take a hit for future Capital Gains Tax which they otherwise would have been escaped
- Sundry gift allowances being replaced with a single annual tax free personal gift allowance for IHT purposes of £30,000.
One benefit of the proposals might be the simplification of the existing rules on the taxation of trusts. However, the present ability to give away an unused NRB (single at today’s rates of £325,000) tax free into a trust every 7 years would be ended.
The Technical Counsel for the Society of Trust & Estate Planning commented that “the APPG’s report is a welcome addition to the debate on Tax reforms as the government weighs its options”.