22 November 2023
If you are covering the absence of IHT changes at the Autumn Statement, please see the following comment from Rachael Griffin, tax and financial planning expert at Quilter:
"After much speculation over the past few weeks zero changes to inheritance tax have been announced, which given only 4% of the nation pay the tax will probably not make too many people that unhappy. The optics of getting rid of IHT at the moment might have been too hard for the government to bear but this is certainly an area to watch for the budget next year.
"However, the lowering of the headline rate of IHT from 40% would have undoubtedly have been met with approval from core Tory voters. Despite there being no changes, the nature of IHT is that many see it as a 'voluntary tax' due to its numerous exemptions, reliefs, and allowances, and makes the actual impact on estates vary significantly from the headline rate. This complexity can obscure the real rate paid by estates, often resulting in much lower effective taxation.
"The abolition of IHT or a change to the headline rate may also have been unpopular with accusations that it would have benefited the rich at a time when the nation is struggling with the cost of living crisis. However, there was a missed opportunity in addressing the complexities and inequities of the IHT system, notably the Residence Nil Rate Band (RNRB). The RNRB, while well-intentioned, is marked by its complexity and often excludes a significant demographic, particularly the rising number of childless elderly. As we look towards an aging population with increasing childlessness, the RNRB's exclusionary nature becomes increasingly problematic. A more equitable and simplified IHT system involving raising the nil rate band to £500,000 would not only be fairer but more reflective of the changing demographics and societal structures of this country."
