During the 2010 general election campaign, David Cameron's Conservative Party promised an increase in inheritance tax (IHT) reliefs to allow taxpayers to leave up to £1m of their estates to their family without paying inheritance tax.
This pledge came to fruition in 2017 with the introduction of the Residential Nil Rate Band (RNRB) which, when take together with the existing Nil Rate Band (NRB) allowed a married couple to leave up to £1m free of IHT to their direct descendants provided certain criteria were fulfilled.
The result of this additional allowance has been a drop in the inheritance tax take for the first time in 10 years. Previously a buoyant housing market coupled with a freeze on the value of the NRB since 2009 had seen IHT on the rise and generating a valuable source of income for the Treasury.
However, a review of the mechanics of inheritance tax is currently underway. This was originally driven by a desire for simplification but must also now be viewed in the light of recent global events which has left the Treasury feeling the pinch and actively seeking ways to boost its resources.
Whether inheritance tax will be substantially altered remains to be seen but planning ahead is always advisable and never more so than in the present times of uncertainty.
Govt’s IHT takings fall for the first time in a decade