Murray Beith Murray LLP is a leading Scottish private client law firm.
For 175 years we have specialised in meeting the legal, financial and administrative needs of individuals and families, family trusts, charities and private companies.
Murray Beith Murray LLP is a leading Scottish private client law firm.
For 175 years we have specialised in meeting the legal, financial and administrative needs of individuals and families, family trusts, charities and private companies.
After promising not to raise income tax levels, there is ongoing speculation about what taxes the new Labour government might target to meet its spending commitments.
It is expected that ministers will instead focus on taxing wealth, in particular, property, capital assets, including investments, and individual’s savings.
Among the low hanging fruit identified by advisors to the Chancellor, is likely to be Inheritance Tax (IHT). While the rate is not expected to change, there is speculation over potential movement in the current threshold, which has remained at £325,000 since 2009.
Rachel Reeves, Chancellor of the Exchequer, may also feel there is scope to lower the current £175,000 nil-rate band on residential property in relation to IHT, given the significant rise in house price inflation since the rate was phased-in between 2017 and 2019, and particularly since the end of the covid- 19 pandemic.
At present, married couples can pass estates, tax-free, to their spouse, potentially creating a £1million threshold, above which the IHT rate is 40%. The Chancellor may feel this regime is too generous.
Changes to "potentially exempt transfers" (PETs) – gifts made within seven years of death – are also possible.
The chancellor may change the period under which PETs apply, reform “Taper Relief” and/or review the amounts which can be gifted.
A "double death tax" (capital gains tax on inherited assets) is another rumour, alongside possible changes to IHT exemptions for pension funds.
Other areas likely to be targeted by the Chancellor include relief that agricultural and business property currently enjoy – either at 50% or 100% of the value of the assets. Business Relief, dating back 40 years, has no upper limit and could be curtailed, despite purported government support for private sector investment.
While budget changes are uncertain, reviewing current IHT rules, beneficiaries, and potential family impact is prudent. Gradual implementation of changes may provide time for adjustments.
The looming budget brings uncertainty for many people. Failure to plan ahead or react after any tax changes are confirmed, could have detrimental implications on people’s wealth.
This blog was written in conjunction with Trainee Solicitor, Molly Alba.
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Murray Beith Murray LLP was established in 1849, as advisors for generations of clients, committed to our values of integrity, expertise and trust. This aim and these values continue to this day, as does our commitment to be here when you need us.
