Inheritance Tax (IHT) – Budget 2011 roundup

Inheritance Tax (IHT) – Budget 2011 roundup

  1. Charity donations encouraged
  2. No changes to basic rules
  3. No review of IHT legislation announced

 

As far as IHT and estate planning are concerned, this was a fairly uneventful Budget.  The only real point of note is the inclusion of a tax rate reduction for charity donations.  The basic rules remain unchanged, with no mention of the proposed legislation review by the Office of Tax Simplification (OTS).

Please read on for the IHT headlines in more detail…

Charity donations
From 6 April 2012, the IHT standard death rate will be reduced from 40% to 36% when 10% or more of the net estate value is left to a registered charity.  The saving will increase the charitable donations and will not increase the amount received by any beneficiary. We note that this change and the calculations to be used are currently open to individual interpretation, and look forward to further clarification when the legislation is passed later this year.

Basic rules
The nil rate band is still frozen until 2014/15, but will then increase in line with CPI each following year. The DOTAS (Disclosure of Tax Avoidance Schemes) regime will be extended to include IHT planning via trusts from 6 April this year.  The regime will not apply to the WAY’s current range of IHT mitigation plans, but would affect any new trust based plans that we introduce.  We will of course provide as much information and assistance as we can when introducing any new plans that are subject to the DOTAS regime.

OTS review
Some expected an announcement regarding the Office of Tax Simplification (OTS)’s proposal that there should be a top down review of Inheritance Tax as a whole.  This was not forthcoming in this Budget, but may still be announced at some point in the future.  We believe that any changes would likely be made with the aim of raising more tax – the driver for change more practical than ideological.  We will of course keep an eye on this proposal and inform you of any effect this would have on the WAY range and your clients’ investments.

WAY has taken great care to ensure that our IHT mitigation plans are, and will remain, effective.  We liaise with HMRC on all new plans, concepts and subsequent changes in relevant legislation to make certain that our plans are still innovative and, above all, useful in the current financial environment.

Mark Benson, TEP CertPFS,
Technical Manager, WAY Investment Services Limited
28th March 2011
www.waygroup.co.uk

Posted on 28th March, 2011 | Tags: , , , , , , |
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