Labour breaks silence over scrapping inheritance tax seven-year rule
The Labour Party government has broken its silence over potentially SCRAPPING the inheritance tax seven-year rule. Labour Party Chancellor Rachel Reeves has directly dismissed speculation that the government would scrap the inheritance tax seven-year rule.
Ms Reeves told GB News she has "no plans to make changes". "There is a feeling among a lot of people that there will need to be more tax increases to balance the books," said Olly Cheng, financial planning director at Rathbones.
Whatever the nature or size of the gift, if it was made more than seven years before you die, it is exempt from IHT. For non-exempt gifts made between three and seven years before you die, “taper relief” may apply if your estate is chargeable for IHT, which means that tax is charged at a reduced rate.
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Nimesh Shah, chief executive of Blick Rothenberg, warned earlier this week: "The seven year rule is now up for grabs, that seems to be the next target." Ian Cook, financial adviser at Quilter Cheviot, echoed these concerns, describing the gifting rule as "under threat" in the Spring Statement.
"Switching from seven to 10 years is a very easy change to make. I wouldn't be surprised if the Government announces a review of the process," Cook went on and added. Emma Sterland of Evelyn Partners reports more "clients thinking about making financial gifts to their families".
Where tax is payable, if the amount of the gift is above the IHT threshold – currently £325,000 – then the recipient, or a representative of your estate, will have to pay tax on the total value of the gift. If the gift is below the IHT threshold, then the value of the gift is added to the value of your estate, and tax is paid on the amount over the threshold.