The beleaguered Prime Minister and Chancellor Kwasi Kwarteng could look towards for reform, an expert has suggested. Recently, Mr Kwarteng outlined a radical tax plan with vast, expensive cuts which have come under controversy – to the extent the Government has U-Turned on the decision to cut the 45p tax rate.
As such, many have called for a different approach to be taken – with a reconsideration of what has already been laid out.
You are reading: Inheritance tax could be slashed as ‘much-needed sweetener’ for Truss and Kwarteng
Ms Truss and Mr Kwarteng could potentially hark back towards statements made in the Tory leadership campaign.
During the leadership run-off, Ms Truss suggested she would be reviewing inheritance tax if she secured the premiership.
An expert has said this may be an idea the new Prime Minister will wish to return to.
Inheritance tax could be slashed as ‘much-needed sweetener’ for Truss and Kwarteng
Racheal Griffin, tax and financial planning expert at Quilter, said: “The tax is one of the most hated by huge swathes of the population.
“A review might be a much-needed sweetener to keep voters onside if the economy is still stagnating under her leadership come the new year.”
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There are various steps Ms Truss may wish to take when it comes to the approach on inheritance tax.
For example, Ms Griffin highlights, she may choose to raise the IHT nil-rate band.
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Inheritance tax is commonly loathed by Britons
The nil-rate band is the threshold after which a person starts to pay inheritance tax.
The residence nil-rate band relates to the value of a home, and this could also be in the eye line of the Prime Minister.
Ms Griffin continued: “Since house prices have soared in recent years, many people who may not have paid IHT before are starting to have to pay it due to property wealth.
“However, it is proving a lucrative tax for the Government so she may not actively change anything to do with IHT itself but instead tinker with the various gifting allowances.”
As Ms Griffin highlights, changes to inheritance tax allowances could also be on the agenda.
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Allowances help people to bring down their inheritance tax bill, which for many will be welcomed.
Modifications could help people further legally avoid inheritance tax.
Ms Griffin continued: “The annual gifting allowance has been £3,000 for far too long and increasing this could encourage wealth transfer in an IHT efficient way.
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“It could help younger generations with the cost of living and the current inflationary environment we are living in.
“Similarly, the gifting allowance for marriages or civil partnerships is £5,000 to a child, £2,500 to a grandchild or great-grandchild and £1,000 to any other person tax free.
“These allowances could all be raised. This would likely score points among voters even if not that impactful.”
A potential review of inheritance tax would follow a high take for HMRC.
The latest data found receipts for April 2022 to August 2022 are £2.9billion, which is £0.3billion higher than in the same period a year earlier.