Inheritance Tax – I Said Something Similar Last Year!January 7, 2020
Michael Graham of Cleaver Fulton Rankin discusses the importance of making a will against the backdrop of the General Election.
This is the month where talk often turns to ‘resolutions’ and we could all do a lot worse than to take a little time to review the planning which we have in place.
Last year I pointed out that the political situation locally and nationally was uncertain and I mentioned that the then Chancellor, Phillip Hammond, had instructed the Office of Tax Simplification (OTS) to conduct a review into Inheritance Tax, with the stated aim of reducing the complexity of the system. The OTS carried out a nationwide survey into the key issues but the subsequent report appears to have been shelved due to the change of government and the forthcoming election. I am writing this at the beginning of December 2019 with a general election less than two weeks away, so I would be a fool to suggest that I know what is in store for us, but what I can say is that both the Conservatives and Labour have indicated an intention to make changes to the tax system.
Sajid Javid, our Chancellor at the time of writing, has indicated that inheritance tax is ‘on his mind’ and that he understands the arguments against it. There is then perhaps the possibility of a softening of approach to inheritance tax by a future Johnson government which might benefit those who fall within its net. On the other side of the House, Labour have indicated previously that they would abolish the Residence Nil Rate Band and, more recently, have suggested removing inheritance tax altogether and replacing it with some form of ‘wealth tax’. Such a tax would presumably be more difficult to plan for.
Whatever happens, I would suggest that, once the dust has settled, the New Year would be a sensible time to review your will, or indeed to make one for the first time if you have not yet done so. A will is easily the most important building block of any estate planning and without suitable arrangements in place you cannot be sure that your family or other chosen beneficiaries will be properly provided for. It is also important to try to future proof one’s will as much as possible as even the simple passage of time can render certain arrangements obsolete. Inheritance Tax changes are only part of this – for example, legacies left in today’s money can be reduced over time to almost nothing given the effects of inflation. Finally, it is important to try and protect assets as much as possible from the risk of care fees, and a well-drafted will can often go a long way to doing just that.
Because of the frequency with which the law in this area can change, it is wise to meet with your professional advisers every few years just to see if there are any changes which need to be made to your wills or any other aspect of your estate planning. In addition, if you experience a significant change in your personal circumstances those issues should also act as a trigger for review.
At Cleaver Fulton Rankin we have significant experience and expertise in advising on all aspects of will drafting and estate planning. If you would like more information please contact me or a member of my team.
This article has been produced for general information purposes and further advice should be sought from a professional advisor. Please contact our Private Client team at Cleaver Fulton Rankin for further advice or information.