With the budget just around the corner on 26th November, it’s time for the usual speculation as to what announcements Rachel Reeves is likely to make.
It’s well known that the finances are a mess, so how are the government going to raise the much-needed funds…..what’s the word on the street….
* An increase in the tax rates by 1% or 2% – this would achieve the same as putting National Insurance Contributions (NIC) on rental income and pensioners that are still working after retirement age
* Extending the 7-year survivorship period for lifetime gifts to 10 years
* Removing the normal expenditure out of income exemption – the thought behind this is to counter people who are taking income from their pension and gifting the income using this exemption, ahead of pensions becoming liable to IHT with effect from April 2027
*Removing the residential nil rate band
*Reducing the VAT threshold to £30,000 – this broadens the tax base so raising a little but more from lots of people
The good news……. pre-budget briefings have suggested that smaller, family-owned farms could be removed from the new inheritance rules with an increased cap of £5 million of agricultural relief reportedly being under review.
Raising the tax take is very much on the agenda, with inheritance tax in the firing line again, with previous talks about a wealth tax being imposed not coming to fruition.
What we can be sure of is that the current government has not finished making changes to inheritance tax but what they will be we will have to wait and see.
What is important is that you should not let what might happen drive what you decide to do. Planning is important but you should never let tax dictate what you do.