Families 'scrambling' to pass on wealth before October tax raid from HMRC
Families are "scrambling" to pass on wealth before October to avoid higher tax bills. UK households are trying to pass on cash ahead of a planned inheritance tax raid from the new Labour Party government and HMRC after the October Autumn Statement.
Changes to capital gains tax (CGT) and inheritance tax (IHT) are high on the list of revenue-raising measures being considered by the Treasury. The chancellor should also close loopholes in IHT that “allow the very wealthy to avoid paying their fair share, and undermine public trust in the tax”, the thinktank said. Ending business and agricultural reliefs and bringing pension pots into IHT would raise £2bn a year.
Lizzie Murray, of accountancy firm Saffery, said people who had always intended to give money to their children were now accelerating those gifts while the current rules are still in place. She said: “I’ve got clients with children in their 20s – who would perhaps prefer to wait until the children are in their late 20s or early 30s to make a gift.
READ MORE What Kate was 'really trying to say' in 'highly unusual' cancer statement
"But they are taking a risk on the child rather than taking a risk on the Government, in the expectation that the tax landscape is likely to get worse from October 30.” Giving away assets allows a person to lower their inheritance tax liability by bringing the value of their estate underneath the tax-free allowance or as close to it as possible.
Sean McCann, of insurer NFU Mutual, said middle-class families were using up these allowances in case Rachel Reeves scraps them. He said: “There is a concern that next month’s Budget could see a cap introduced, which is prompting some to bring forward their plan to gift to the next generation.”
During Labour's campaign, Ms Reeves and Sir Keir Starmer pledged to not impose higher taxes on “working people”.