Inheritance tax change unlikely to benefit the North
The summer Budget saw further details emerge about the Conservative’s long held promise to eliminate the inheritance tax charge on main residences provided they are bequeathed to direct descendants after 6 April 2017.
The £1m inheritance tax exemption is their goal but why have they made it so complicated and will it really be relevant to taxpayers north of Watford?
If Great Aunt Agatha is feeling a bit out of sorts and is residing in a more salubrious part of Yorkshire (think the so called Golden Triangle around Wetherby, Harrogate and Ilkley) you better keep her in good spirits because the benefit of an additional £175,000 IHT allowance, which will top up her existing £325,000 nil rate band, will not be fully phased in until 2020/21 – just in time for the next General Election I can hear you all say!
Further, who really benefits from such complication?
Well I do for one. It’s great news for tax and financial advisors; so far I’ve had enquiries about claiming the extra allowance for a Spanish property (sorry, not applicable), on a valuable UK holiday home (again, not applicable) and best of all, on a proposed bequest to a long term partner, where the couple have lived together for more than 20 years (that’s another no by the way!).
We continue to see tax policy driven by short-term economics. The inheritance tax changes announced last week, whilst cloaked in the language of equality and fairness, will only lead to further distortions in the UK property market as taxpayers rush to acquire those £1m property assets because they will receive favourable tax treatment in five years’ time.
Let’s just hope that they don’t set other UK tax reliefs and allowances to favour a certain part of the UK – unless of course it’s a reduced beer duty on my favourite Yorkshire ale!