Inheritance Tax Reform Won't Be Painless

Editor's Views: A reform of the dreaded "death tax" is welcome but will come at a cost, why spreading risk might hit your returns and Brexit Day finally arrives

Holly Black 31 January, 2020 | 10:32AM

editor

There’s no another tax that gets people talking quite like inheritance tax does. It’s easy to understand why; the idea of the taxman chasing us to the grave is pretty dark. A group of MPs has proposed a drastic shake-up of the IHT rules, which could see the headline tax rate slashed from 40% to 10%.

While that move will no doubt be met with a resounding cheer up and down the country, it is likely to come at cost. Perks such as the annual tax-free gifting allowance could be scrapped, before anyone gets accused of being too generous. I wonder also if the tax-free threshold of £325,000 would be reduced under such a regime. For all that people moan about IHT, currently only around 5% of estates are actually liable for the tax – overhauling the whole system could suddenly widen the net.

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About Author

Holly Black  is Senior Editor, Morningstar.co.uk

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