More and more families will be hit by Jeremy Hunt’s stealth inheritance tax plans and should act now to mitigate the burden, warns the Investment Director of one of the world’s largest independent financial advisory, asset management and fintech organisations.
The warning from James Green of deVere Group comes as the UK chancellor is next week at the Autumn Statement reportedly planning to extend a freeze in the inheritance tax ‘nil-rate band’ from 2025-26 to 2027-28, a move that would raise at least half a billion pounds for the Treasury.
James Green says: “This is going to be branded ‘fiscal drag’, where inflation and earnings growth push more taxpayers into higher tax brackets.
“But, make no mistake, what this really is is a stealth raid.
“This covert tax increase will not be flagged up on any official list of tax hikes. But it will soon start putting a painful squeeze on grieving families.”
He continues: “The inheritance tax (IHT) net is being extended. IHT is very obviously no longer just for the super-wealthy, as it was originally intended.
“It’s impacting more and more middle-class families whose main asset is their family home.”
Leaving a legacy to loved ones “is a very human instinct,” says deVere Group’s Investment Director. People feel “especially aggrieved by this form of tax [IHT] because it is, in effect, a form of double taxation as tax is being paid on assets which have already been paid for and previously taxed.”
As such – and because more people are now being affected by it, and no doubt because there is an ageing population – James Green says he expects an increasing number of families will be keen “to prioritise estate planning ahead of other factors in their long-term financial strategies in order to mitigate the potential IHT liabilities.”
Experts suggest ways to mitigate the IHT burden include holding properties as ‘tenants in common with your spouse, investments that qualify for relief, gift allowances, and establishing trusts, amongst other options.
He concludes: “There are legitimate solutions to limit the amount your loved ones may potentially face due to Jeremy Hunt’s anticipated sly tax hike for families. The key is to act sooner rather than later.
“Without taking steps to mitigate the inheritance tax burden, unsuspecting bereaved families might end up with a huge, unmanageable tax bill.”