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Inheritance tax threshold changes could affect more people
Weybridge-based chartered accountancy firm Midgley Snelling LLP is advising that changes to the uprating of the threshold at which individuals become liable for inheritance tax (IHT) could result in more people having to pay it.
New legislation due to take effect from 6 April 2015 will see the nil rate band will rise in line with the Consumer Prices Index (CPI) instead of the higher Retail Prices Index (RPI).
The nil rate band last rose in 2009, and is set to remain at its current value of £325,000 until 2014-15. Had this freeze not occurred, and if the nil rate band had risen in line with RPI instead, the current threshold would now be more than £360,000.
The Treasury estimates that the move will mean that around 1,500 more estates will have to complete more complex paperwork for HM Revenue and Customs in 2015-16. Of these, more than half – around 900 – will be liable for IHT and this figure is expected to continue rising.
Research from Legal & General shows that while 69 per cent of people are aware of the potential impact that IHT will have on them, the same percentage have done nothing to minimise it except for making a will.
Peter Bond, tax partner at Midgley Snelling LLP, said: “People often put off estate planning because they feel it is too early to be thinking about inheritance tax, but it is never too early to start planning where tax is concerned.
“With these changes set to come into force in April 2015, more people will be affected by IHT than before, making it all the more important to plan ahead to mitigate the
impact.”
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