Inheritance tax (IHT) is chargeable on the value of a person’s estate which falls above a certain threshold when they pass away. Presently, Inheritance Tax is set at 40 percent and will usually be applicable to estates with a value of more than £325,000. While IHT can bring in a significant tax take for HMRC, the tax is commonly accepted as one which is not well-liked among Britons.
He said: “As with every Budget, speculation around IHT abounds; there has even been a cross party-agreed white paper on IHT reform sent to the Chancellor for consideration.
“What piqued my interest is the proposed scrapping of the seven year rule which allows people to gift as much as they want whilst still alive, and be taxed at zero percent if they are still alive seven years after the gift has been given.
“The suggestion in the aforementioned white paper was to replace this with a cap of £30,000 per annum with gifts above the surplus hit with an immediate IHT charge.
“That percentage charge was proposed at somewhere between 10 and 20 percent.”
“Wealthy individuals looking at managing their estates must now be looking very seriously at SEIS and EIS schemes, which can only be a good thing for the many startups looking for early-stage investment.”
SEIS, or the Seed Enterprise Investment Scheme, was introduced by HMRC in April 2021 to help smaller companies.
Connectd has stated the scheme mitigates Inheritance Tax liabilities as long as the investment was made two years prior to the death of an investor.
In this sense, it can act as a relief of Inheritance Tax, which may be particularly incentivising for Britons in this position.
What will happen to Inheritance Tax is, as of yet, unclear, however, all eyes will be on the Chancellor this afternoon for further updates.
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