Estate planning news – Proposed changes to inheritance tax rules sparks debate
HM Revenue and Customs (HMRC) is currently considering a change to laws regarding inheritance tax (IHT) as a means to encourage charitable giving, and a full consultation on the proposals has recently closed.
However, some solicitors and investment advice practitioners have said that the proposed reduction of the inheritance tax rate from 40 percent to 36 percent for those who leave at least 10 percent of their taxable estate to charity is too complex and narrow in scope to be of real benefit to worthy causes or to reduce the burden of IHT on beneficiary families.
The change was proposed in the March Budget with a start-date set for April 2012.
Keith Johnston, director of policy and communications at the Society of Estates Practitioners, which represents professionals involved in writing and planning wills, responded to the consultation and said members’ opinions were divided over the efficacy of the proposals.
“There has been quite a lot of debate among our membership about how sensible this proposal is,” he said. “We don’t know if it will boost charitable legacies or just add complexity to an already complex process. There’s not enough evidence either way.”
However, tax law specialist Fenella Martin-Redman said in the East Anglian Daily Times, “The proposed incentive is more likely to increase planned charitable legacies that are already close to the 10% threshold than encourage new ones, but the potential impact is sufficient to justify the policy.”
Adding, “We broadly welcome the proposal of a lower rate of IHT. However, we think HMRC should endeavour to make the new rules as clear as possible to avoid further complications in already complex legislation.News