27 March 2015 #Private Client
George Osborne delivered his Budget on 18 March 2015. In this summary we aim to highlight the key changes made to the Inheritance Tax rules affecting individuals:-
Papers leaked in the run-up to the Budget appeared to reveal Conservative plans to allow parents to leave homes worth up to £1 million to their children without paying inheritance tax (IHT). The proposals would have reduced IHT on properties worth up to £2 million by £140,000. Whilst the measure was not included in the 2015 Budget, it might feature in the Conservative party's election manifesto.
As some of you may be aware, it is possible for beneficiaries to change the provisions of someone’s Will after their death, provided such changes are made by a deed executed within two years of the date of death. Such changes are currently treated for inheritance tax purposes as having been made by the deceased themself.
The government have announced that they are to review this area following recent news stories about the use of such deeds by the families of high profile politicians to minimise inheritance tax.
The inheritance tax exemption that applies to members of the armed forces who die or whose death is caused or hastened by injury whilst on active services is to be extended to emergency service personnel and humanitarian aid workers responding to emergencies. These changes will apply to deaths on or after 19 March 2014.
The inheritance tax exemption for medals and other decorations for valour or gallantry will be extended to all medals and decorations awarded to the armed services or emergency service personnel, and to awards made by the Crown for achievements and service in public life.
Proposed changes are also being introduced to target avoidance through the use of multiple trusts, although the government has confirmed that it will not be introducing a settlement nil rate band.
The government has proposed changes to draft legislation published on 10 December 2014, which contained rules to prevent people obtaining Inheritance Tax advantages by increasing the value of assets in multiple trusts on the same day.
The proposed changes mean that the rules will only apply to ‘relevant property trusts’ where the value of an addition is over £5,000.