We have seen media outcry over Rishi Sunak’s “stealth tax” on the middle class as the personal allowance and income tax thresholds are frozen until 2026.
But this is nothing new. The inheritance tax allowance has been frozen at £325,000 since 2009 and under Mr Sunak’s budget, it will remain frozen at this level for at least another 5 years. The effect of inflation and increasing house prices means many more families will now face paying inheritance tax over the coming years.
Estate planning is therefore likely to focus on passing assets down to future generations during an individual’s lifetime, or placing assets into trust so they do not form part of an individual’s estate on their death.
However, we must be cautious when considering these options. It is important to ensure that assets are gifted effectively for the purposes of removing them from an individual’s estate for inheritance tax purposes. Furthermore, gifting assets to family members or into a trust to mitigate inheritance tax can trigger other unexpected tax liabilities such as a capital gains tax liability.
If you have any questions regarding estate planning or would like to take this opportunity to review your Will, then feel free to contact our Wills, Trusts and Probate Team on 01603 610911 or via email email@example.com.