Eight out of ten people (80%) now believe that inheritance tax (IHT) rates are likely to rise as just one way to pay for the bailout that will be needed because of the COVID-19 pandemic, a poll suggests.
The same survey says that almost a third (30%) believe this is “highly likely” to happen.
A spokesman for The Private Office, the financial adviser firm that carried out the research, said that as we appear to be heading for the worst financial downtown since wartime Britain, comparisons are being made to how the Government dealt with the aftermath of WW2, when death duty tax, as it was known, was raised to over 80%.
The spokesman said that “given all the options may be on the table” when the Chancellor looks at how he may balance the books, a possible increase in IHT rates “could be around the corner”.
When do you have to pay inheritance tax?
Everyone has a £325,000 nil-rate inheritance tax band. If you are married or in a civil partnership, you have a combined nil-rate band of £650,000. 40% IHT is then payable above this threshold or 36% if you leave at least 10% of your net income to charity.
An additional nil rate main residence band was introduced in April 2017 meaning up to £2million could be passed on to direct descendants.
IS A IHT TIMEBOMB ABOUT TO BLOW?
- 80% of people believe its likely IHT rate will rise as one way to pay for the coronavirus bailout
- 27% believe it would be very likely to rise
- 31% of people believe IHT planning is more important than before the pandemic lockdown
- 67% of people believe IHT planning was already important
- 25% of people are more comfortable about discussing their finances after death, than they were before the pandemic
Source: Research carried out on behalf of The Private Office to Savingschampion subscribers and includes 1,092 respondents
The spokesman said, though, that the survey results show that almost 70% of respondents thought IHT planning was “already important”.
He added: “The pandemic has encouraged others too – one in three (31%) now feel that IHT planning is more important than it was before.”