Is Inheritance Tax up for review?

As a farmer I am keen to do a full review of my financial position in the coming months. One grey area is Inheritance Tax and the ever-changing rules. What is the current position with Inheritance Tax and what key things must I be aware of?

Gary Priest, partner and tax expert at Shropshire law firm mfg Solicitors
Gary Priest, partner and tax expert at Shropshire law firm mfg Solicitors

Gary Priest, partner and tax expert at Shropshire law firm mfg Solicitors replies: Chancellor Phillip Hammond’s Budget in November made almost no changes to the current Inheritance Tax rules but a report from HMRC published at the same time has led some advisors to ponder whether change might well be in the pipeline.

The research by HMRC canvassed the views of those making wills and benefitting from wills and their understanding of how the current rules operate. It seems that most of those interviewed had a limited understanding of how the tax works, with little awareness of reliefs such as Agricultural Property Relief and Business Property Relief which substantially reduce the tax bill in certain situations.

It may well be that this will lead HMRC to look at reforming the current rules in the interests of “simplification” which will send a shiver down the spine of those of us who remember the misuse of that word when previous taxes have come under attack from HMRC.

Indeed, recently the Office for Tax Simplification announced that it would be starting work on a review of the Inheritance Tax rules, so it may well be that reform is inevitable.

We obviously do not know at this stage what form the changes may take, but it is looking increasingly as if we may be living in something of a golden age for farmers and any changes to the rules will almost certainly be to their detriment.

One of the other issues that came out of the research was that a lot of people assume that Agricultural Property Relief will apply to them. Sadly, that is not necessarily the case as the current rules are not straightforward, so you are right to be conducting a review of your current position – something which should also be built in as part of your business plan.

Readers needing advice can contact Gary Priest by email at gary.priest@mfgsolicitors.com

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