Tax planning news

No relaxation of UK inheritance tax laws

4 September, 2007

With the first wave of the 17 million baby boomers born between 1945 and 1965 now in or preparing for imminent retirement, Paul Wilcox, chairman of fund manager and IHT planning specialist WAY Group says an onerous UK IHT policy is here to stay.

He said: “Chancellor Alastair Darling, like his predecessor Gordon Brown, will be loathe to extend any tax breaks to this group – the first truly well off generation for the most part property wealthy individuals.

“The fact is that the revenue from IHT is central to the Government’s core planning, and the current baby boomers who are now retired or about to retire will start to die off within the next decade or so, and the Treasury is licking its lips in anticipation of some bumper pay days.”

As a result of increasing property prices, increasing numbers are being hit by 40 per cent tax on everything they own over the IHT threshold when they die.

“Revenues are up by more than 50 per cent in the past five years and the Government expects to raise £4bn from death duties in this tax year,” added Wilcox.

“Even accounting for longer life expectancy because of medical advances, less smoking and more informed diet and exercise programmes, the first true baby boomer generation – those born immediately after the end of WW 11 – should be putting serious IHT planning in place.

“Property continues to be a major source of IHT revenue for the Government.”

The number of homes valued above the IHT threshold has nearly doubled in five years according to the Halifax House Price Index, August 07, with the average detached house in London, the South East and the South West worth more than £300,000.

Wilcox said: “When you think that those first baby boomers most likely bought their first homes in the mid to late Sixties, when the average semi could be picked up for less than £5,000, you get an idea of the kind of wealth built up in many of these families.

“Even if they are short of cash or other assets, the vast majority of households from this generation are not in a position to give away their homes before they die to bring their net wealth under the IHT threshold of £300,000.”