Inheritance Tax nil rate band frozen in a surprise move

The nil rate band was originally due to rise to £350,000 for transfers made on or after 6 April 2010.

Richard Mannion, national tax director at Smith & Williamson, the accountancy and financial services group, commented that “Inheritance tax is a largely emotional tax that in reality few families pay. The freezing of the nil rate band does however create clear political water between Labour and the Conservatives. IHT tax receipts peaked in 2007-08 bringing in £3,834 million but has since fallen to £2,218 (2009-10). (see attached graph). Historically, the nil rate band has risen in line with inflation.  Taking into account average property values and other assets and investments held at death, freezing this allowance is likely to bring rather more estates into the IHT net during the next few years.  This will affect couples whose joint assets are worth over £650,000, and with the IHT rate currently at 40% this may result in a significant further financial burden, especially for those whose wealth is wrapped up in property with little liquid cash.”

For further information, please contact:

Richard Mannion – National Tax Director – 020 7131 4252 / mob 07799 761326

PR queries:

Kate Harrison  020 7131 4228

Jess Koslow      020 7131 4264

Matt Rowe        020 7131 4550

Disclaimer

By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.

Note to editors

Smith & Williamson is an independent professional and financial services group employing about 1,500 people. The group is a leading provider of investment management, financial advisory and accountancy services to private clients, professional practices and mid-to-large corporates. The group operates from offices in London, Belfast, Bristol, Glasgow, Guildford, Maidstone, Salisbury, Southampton, and Worcester.

Smith & Williamson Limited

Regulated by the Institute of Chartered Accountants in England and Wales for a range of investment business activities. A member of Nexia International, a worldwide network of independent accounting firms.