The governement is considering making changes to a well known loophole in the Inheritance Tax (IHT) laws and rules.
During the past five years 72 per cent more people are paying Inheritance Tax with the government now receiving around £3.3 billion annually. Mostly this is due to house price increases bringing more people into the IHT bracket, with tax payable at 40%.
The government are to look more closely at the seven year gift rule. Currently, effectively, if you give anything away without reservations (you don’t keep it, use it or have access to use of it) then the item becomes tax exempt after the seven years have been completed. There’s a sliding scale of tax payable from years 0-7 from giving away the item, if you don’t live through the seven years of giving away the gift.
The government department responsible is now checking all paperwork to see it has been completed correctly to check the tax free allowance is being used correctly. Bank statements and pension plans will be looked over.
Government is obviously trying to find any way it can to raise tax through this already unfair tax which has failed to keep up to date with either retail or property inflation causing more middle class families to pay the tax while those who have so much money, they have it to spare, are paying accountants and laywers to find ways to get around paying the taxation.
LSUK use schemes already agreed by the chancellor to mitigate the amount of tax payable or, as is the case on most ocassions, actually eliminating the tax payable with correctly drawn Wills.
Filed under: Legal Advice, News
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