An Inheritance Tax relief for home owners in the South East? - Mazars - United Kingdom
An Inheritance Tax relief for home owners in the South East?
Today's Finance Bill includes details of this new relief announced in the Chancellors Autumn Statement.
06/12/2011
Gifts to charities are in any event exempt from Inheritance Tax (IHT). What this provision does is to give a 10% reduction in the rate applying to an estate on death where more than 10% of the estate is left to charity. So a rate of 36% applies rather than 40%.
Reductions in tax rates are better than nothing, but IHT is so ramshackle and full of reliefs that it is usually possible for the tax to be avoided on a large estate in any event with foresight and planning. HMRC estimate the cost of the relief to be around £60m in a full year which is modest and even that feels like an over estimate.
However the area where the relief will be most useful is in those cases where planning is difficult – where for example the majority of wealth is tied up in the private residence, in an area of high property prices, and where the property is used up to the time of death. Planning around the private residence is both difficult and complex and many prefer not to do this. In these cases individuals should certainly consider using the relief to minimise the tax rate on death. The effect of the relief therefore may well be to recycle to charities a part of the benefit of long term price rises in residential property in the South East.
For more information contact Lindsay Pentelow .
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