I have recently read an article stating that The Daily Telegraph has launched a campaign seeking that the government abolish inheritance tax (IHT). The Daily Telegraph said that, apparently, more than 50 MPs are also demanding that the Prime Minister scraps the “morally wrong” tax on people’s estates once they pass away.
IHT in 2023
At present, the IHT threshold is £325,000, meaning that anything valued above that amount is taxed at 40%. This has been frozen until 2026.
Whilst you may be able to receive IHT benefits if you are married and the second to pass away, it is still not a high amount meaning that most families are not being taxed. When you think about the value of properties these days, the value of the asset alone usually eats up the majority of the IHT threshold. When I speak with people, many do not realise that the IHT bills need to be paid prior to receiving the Grant of Probate.
What does this mean in reality?
Well, most Executors do not have a large amount of money sitting in their back pocket to pay off the IHT bill. They decide that a property within the estate needs to be sold to pay that IHT bill. But they cannot sell that property until they have a Grant of Probate… but they cannot apply for Grant of Probate until the IHT bill is paid… and they go around in this vicious circle.
It is very important for people, especially the Executors, to understand their role and what IHT really means. I recently wrote an article about how “normal” estates are being taxed and it is not a tax only for the rich…
Will it ever be scrapped? George Osbourne pledged pre 2010 election that the only estate that would be taxed would be the most wealthy but look where we are now…
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The information provided in this article is not intended to constitute professional advice and you should take full and comprehensive legal, accountancy or financial advice as appropriate on your individual circumstances by a fully qualified Solicitor, Accountant or Financial Advisor/Mortgage Broker before you embark on any course of action.