• April 23, 2024
 Aaron & Partners Head suggests rumours of inheritance tax scrap ahead of Spring Budget will only ‘benefit those with capital in excess of £1M’

Aaron & Partners Head suggests rumours of inheritance tax scrap ahead of Spring Budget will only ‘benefit those with capital in excess of £1M’

Ahead of the Chancellor’s budget tomorrow, an industry head has speculated around ‘tax cuts and rumours around changes to inheritance tax’.

Clive Pointon, Head of Wills, Trusts and Tax at Aaron & Partners says that Jeremy Hunt will be implored to ‘address rumours’ claiming that ‘inheritance tax is the obvious issue used to distance the Conservatives from their political rivals’.

Inheritance tax disputes have surged since the start of the year, with specialist lawyers estimating 10,000 new cases annually.

Cases like Holly McIntosh’s, who contested her stepmother’s claim to her father’s assets, highlight the emotional and financial toll these disputes take on families, often leading to estrangement and questioning the value of the contested amounts after legal expenses.

Professionals in the field stress the emotional weight of these disputes on clients, with increasing family complexity and concerns over the mental capacity of the will maker at the time of writing contributing to the rise in cases. Legal experts suggest that capacity assessments at the time of will creation could prevent such disputes.

The expansion in legal teams specialising in wills, trusts, and probate disputes is evident, with firms like Irwin Mitchell increasing their staff tenfold over a decade. This comes as inheritance tax receipts are predicted to hit a record £7.5 billion this financial year. Disputes have been said to arise from ‘a rise in asset prices and an increase in dementia’, according to the Financial Times. The inheritance tax nil-rate band and the residence nil-rate band thresholds are set to remain unchanged from 6 April 2026 to 5 April 2028.

Disputes are also being driven by the passing of the property-rich boomer generation, which has upped the financial stakes for family members; alongside the 40% inheritance tax. Scrapping the tax, or reducing it – has long been the party trick up the Tory Party’s sleeve – with budget speculations claiming Hunt will use inheritance tax as a tactical boon in an election year. This is something Pointon questions a change that will ‘benefit those with capital in excess of £1M’ is something up for debate.

Scrapping the tax could see a decline in dispute cases, and would change the Wills and Probate landscape significantly.

The Aaron & Partners boss suggests that a more ‘positive change’ would be a further reduction of National Insurance for both employers and employees.

Pointon said:  

“With a General Election approaching, March’s Spring Budget will likely see the Chancellor face even more pressure to announce tax cuts, and address rumours around changes to Inheritance Tax. 

“The Conservatives share a similar stance on income tax with Labour and have made several recent changes to Capital Gains Tax. This leaves Inheritance Tax as the obvious issue to use to distance themselves from their political rivals. Whether a change that benefits those with capital in excess of £1M is a vote winner is another matter.

“There has been speculation suggesting a reduction from the current 40% rate. However, as the UK has officially entered a recession, any future tax landscape is an uncertain one. As such, we recommend to act now while we are in a climate we understand.

“A positive change would be to action a further reduction of National Insurance for both employers and employees. It feels counterintuitive to tax jobs in the midst of a productivity crisis.”

With a General Election approaching and the UK in recession, Pointon says any future tax landscape is now ‘uncertain’.

Eve Tawfick, Editor