Comment: CGT and Inheritance Tax expectations

Inheritance Tax: “We do not expect that the 40% headline rate of IHT will change”

 
Paul Barham, Partner and Head of International Private Client Tax at Forvis Mazars: “The number of estates paying Inheritance Tax has been increasing over the years due to inflating asset prices and frozen thresholds. So, it is no surprise that changes to this might worry people. We do not expect that the 40% headline rate of IHT will change, and we don’t expect the limits (known as Nil Rate Bands) to decrease. However, we do think that the government may look to tighten rules on gifting money away, perhaps by taxing gifts over a certain size, or introducing a lifetime limit of gifts.

“Some other areas that the government could look at are removing Business Relief on AIM assets, and limiting Agricultural Property Relief.

“Given the uncertainty over how the government might look to change IHT legislation, and given that IHT planning typically involves significant decisions that can impact an individual’s long-term financial position, we are being cautious about undertaking planning in this area currently. However, where individuals have planned to make certain gifts, we are discussing with them whether such gifts should be made over the coming months.”
 

Property investors welcome Reeves CGT ‘climbdown’

Thomas Balashev, founder and CEO, Monta Capital said:

“The Chancellor is right to think very carefully before implementing a hike in CGT, a policy which would scupper investment and inevitably damage growth.

Such a move would hit smaller investors much harder than large corporations, with many operating on tighter margins and much more vulnerable to tax increases. It will also trigger a panic ‘sell off’ of properties, leading to a surge in evictions, wrecking local economics and doing more harm than good.

With interest rates remaining high, it’s critical that ministers send a clear signal to investors that Britain is open for business and that the real estate ecosystem has their full support.

Some of the country’s most incredible and eye-catching developments only exist because investors lend their financial support to major construction projects. If we want to build a stronger economy, with first class infrastructure and housing, then encouraging entrepreneurs to invest should be a top priority.”