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UK Inheritance Tax Changes To Hit More People


Changes to the UK's inheritance tax (IHT) threshold could see more people becoming liable for the levy, chartered accountancy firm Midgley Snelling has warned.

New legislation will see the nil rate band rise in line with the Consumer Prices Index (CPI) from April 6, 2015, instead of tracking the higher Retail Prices Index (RPI).

The nil rate band currently sits at the rate introduced in 2009, GBP325,000 (USD515,192), and will remain at this value until 2014-15. According to Midgley Snelling, 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 GBP360,000.

Treasury estimates show that as a result of the changes, around 1,500 more estates will have to complete more complex paperwork for HM Revenue and Customs (HMRC) in 2015-16. Midgley Snelling calculates that of these, more than half - around 900 - will be liable for IHT, with the figure expected to continue rising.

In addition, Midgley Snelling points out that research from Legal & General shows that while 69% 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, 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,” Bond concluded.

Source: www.ocra.com