In a widely anticipated Spring Budget presentation on Wednesday, Chancellor Jeremy Hunt left industry experts and the public intrigued as he steered clear of any mention of inheritance tax (IHT).
Despite prior speculations suggesting that the elimination of IHT might be a “strategic move” for the Chancellor, it was notably absent from the budget discourse.
In the lead-up to the budget announcement, there had been murmurs and expectations regarding a potential shake-up in inheritance tax policies. Clive Pointon, Head of Wills, Trusts, and Tax at Aaron & Partners, had gone on record stating that Hunt might be urged to “address rumours” surrounding inheritance tax, which some believe could be a pivotal issue differentiating the Conservatives from their political rivals. However, the omission of any mention of IHT has left many questioning the government’s stance on this tax.
Contrary to the IHT speculation, Chancellor Hunt announced several other key fiscal measures. One of the moves is a 2p reduction in workers’ National Insurance, dropping the rate from 10% to 8%.
In a bid to support families, Hunt is also increasing the child benefit threshold from £50,000 to £60,000, a move aimed at easing financial burdens on households. Additionally, small businesses are set to benefit from a higher VAT threshold, increased to £90,000, providing much-needed support to entrepreneurs. What’s more, Chancellor Hunt declared the “abolition” of the “non-dom” tax system. Tom Minnikin, partner at Forbes Dawson, said:
“The lack of any changes to the inheritance tax regime will come as a disappointment to middle-class voters, many of whom have been dragged into the inheritance tax net as a result of various allowances and thresholds being frozen.
Rumours circulated prior to the Autumn Statement that Jeremy Hunt was planning to scrap inheritance tax altogether, but no action was taken. Whilst there was less speculation this time round, some had hoped that the Chancellor would increase the nil rate band – the amount which can be left free of inheritance tax – from its current level of £325,000. The threshold has been set at that level since 2009. No increases were announced.
[The] Budget may reflect the reality that the Conservative Party – despite having aspirations to reform inheritance tax – are unwilling to be exposed to bad press by giving tax cuts to the wealthier in an election year.”
