2021/22 Chancellor's Budget: A quick look at Inheritance Tax (IHT)
Inheritance Tax - Tax Planning
Rishi Sunak has announced the budget for the new year, with contactless payments rising to £100 amongst other changes, but for those of us planning our affairs and thinking about tax planning, the announcement each year about Inheritance Tax (“IHT”) is always an interesting one.
For years there has been proposals to change the workings of IHT, with suggestions to change tax on lifetime gifting and whispered conversations amongst practitioners about how long the additional tax allowance to cover our primary residential property will continue to be in force.
For this year, at least, the IHT thresholds will remain the same. The Budget states that the allowances will now remain ‘at existing levels until April 2026’.
Inheritance Tax Allowance Limit
Estates can continue to pass on IHT tax-free up to:
£500,000 (single person); and
£1million (for a married couple, where the first person died leaving their entire estate to their spouse).
Phoebe Tranter, Probate and Wills Solicitor at Lawson-West Solicitors summarises The Budget's IHT allowance provisions:
"In this year's Budget there is still no mention of extending the Transferable Allowance* to cohabiting partners, or at this stage, any change to lifetime gifting, so on these matters it seems only time will tell!"
If you have any questions regarding tax planning or Inheritance Tax implications for you or your family, then please get in touch with me ptranter@lawson-west.co.uk. Our team of qualified professionals provides support, helpful advice and assistance in calculating the value of an estate for tax planning purposes. This is the type of assistance we provide to clients every day.
*(where one person's unused tax allowance upon death is passed to their surviving married spouse or civil partner when the value of their estate falls below the current IHT tax threshold limit, thereby giving the surviving spouse a greater IHT allowance)
Source: Gov.UK Budget 2021
Useful links: Inheritance Tax Government Guidelines
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