IHT-Solutions

The death of the "nil-rate band discretionary loan trust Will"

Yesterday, I stated that the Inheritance tax regime was likely to be a lot more advantageous by the time of the next election which was anticipated in 2009. Today, the Chancellor has instantly reacted to last week's Tory proposals by immediately implementing what I think will be known as transferable nil-rate bands between spouses/civil partners. You could certainly call the government politically cynical but for once, one can be magnanimous and simply accept that the government have listened to the voices of "middle Britain".

The new rules effective from today means that married couples and civil partners can now enjoy an inheritance tax allowance of up to £600,000.00 currently upon the death of the survivor of them.

Interestingly, the transfer will also benefit those spouses/civil partners who were previous to today already widows/widowers/surviving partners which is an unusually fair move by government.

In effect, the government has now made legal by statutory powers that which has until now been achieved by utilising the nil-rate band discretionary loan trust Will. As such, this form of Will in a stroke has effectively been consigned to the annals of legal history.

A number of thoughts are entering my head as to how exactly this new IHT regime will be implemented and I await the detailed rules which will no doubt be published in the next few days/weeks.

I look forward to posting further once the new rules are fully in place. In the meantime, I suspect there will be a good deal of silent rejoicing at the decision which saves married couples and civil partners up to £120,000 of inheritance tax.

IHT really does influence election dates

Further to George Osborne's proposals to raise the IHT threshold to £1,000.000.00 last week, I thought that IHT would become a central area of debate in what was seen as a forthcoming autumn election. What I did not foresee was that the effect of the announcement was to bounce the Tories in the opinion polls from no-hopers to potential winners within a few days and force Gordon Brown to climb down from calling an election, probably for at least 18 months.

A far more articulate writer than I and my favorite economics commentator, Anatole Kaletsky, neatly sum up the political repurcussions of the Tory IHT proposals in his Times column today.

The really interesting question from my point of view is now how the Labour Party will react to the Tory proposals. As I intimated in my last post, I really think the potential burden of IHT for the majority of taxpayers is likely to be reduced relatively quickly whatever political party is in power.

Vote Conservative and save up to £280,000.00 of Inheritance Tax !

I have just read the following report on the BBC website here. Assuming that the report is accurate, it would indicate that one of the first steps to be taken by a new Conservative Governement would be to increase the IHT nil-rate band threshold to £1,000,000.00 from the current £300,000.00.

This would represent a potential tax saving of up to £280,000.00 representing 40% of the proposed increase in the nil-rate band of £700,000.00.

As ever, there are a number of caveats:-

1. Current opinion polls indicate that the Conservatives have about as much chance of winning a general election as Spurs do of winning the Premiership. (I am an Arsenal fan!)

2. The full details of the Conservative plan are not yet sketched out and it maybe that the proposed full rise in the threshold will take place via a number of uplifts and/or more ominously when financial and budgetary constraints allow.

What we can be certain of is that IHT will be a prominent area of political battle at any forthccoming general election and the net result, whichever of the main parties wins, is likely to be a more attractive Inheritance tax environment. As a flip side, we will no doubt be paying more tax elesewhere to pay for any IHT savings.