Spring Statement: Rishi Sunak outlines plan for cutting taxes
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Chancellor Rishi Sunak today presented the Spring Statement which many expected to breach a range of topics and aspects of the current financial crisis. One such aspect was inheritance tax (IHT), which some experts say could just be “delaying the inevitable”.
Rebecca Durrant, partner and head of private client at Crowe commented: “The continued silence on increases to capital gains tax and changes to inheritance tax is welcome but are we just delaying the inevitable?
“There is still real concern amongst clients that this is still very much on the horizon and uncertainty causes anxiety.”
The Spring Statement is intended to be a mini-budget and is not meant to provide an all-encompassing economic plan like the Autumn Budget does.
It is believed this is why some topics were left out, with Britons now anxiously awaiting the Budget later in the year to find out Mr Sunak’s full plan.
Ms Durrant continued: “In terms of possible changes in the autumn, it will be interesting to see whether the ‘Tax Plan’ that Mr Sunak announced is extended.
“At the moment this is light on detail for private clients and does not address the wealth taxes issue. Neither does it include more detail on the recently released consultation on property taxes.
“Residential property landlords have weathered enormous amounts of change over the last 10 years and the concern is that this could mean more to come.”
She highlighted: “A return to a simpler system would be much more welcome.”
Jake Bernardi, wealth planner at Succession Wealth said the Chancellor went into the Spring Statement “with very few levers to pull” but still “did a good job”.
He explained: “It doesn’t feel like the right moment for major tax reform, so to tinker around the edges is not unwise.
“Capital gains is the elephant in the room. Tax relief on pension contributions for higher earners and inheritance tax reform were also notably absent, and likely to come under scrutiny.”
Another wealth planner at Succession Wealth, Andrew Barr, added that Mr Sunak was “signalling his intentions” whilst bearing in mind the upcoming Budget and 2024 elections.
He noted: “Tax reform feels like it’s being lined up for the next Budget.
“Having inflation under control by 2024 feels bold given where we are. What we’re really talking about is a more manageable level of inflation – so people will have to get used to it, and knocking on their employers’ doors for pay rises. This will of course have an impact on businesses and investment markets.”
IHT receipts from April 2021 to February 2022 reached a record high of £5.5billion, figures released yesterday show.
This is a £700million, or 14 percent, increase on the same period a year earlier.
The previous record was held by the 2018 to 2019 tax year with £5.36billion.
HMRC reportedly commented that the high receipts can be partially attributed to the higher numbers of inheritances being passed on during the pandemic although it noted this cannot be verified until full data becomes available.
Additionally, the high number of transfers were also compounded by the rising property values, which made more estates liable to IHT due to the threshold freeze.
It is also worth noting that the stamp duty holiday that ended in September 2021 also formed part of this time period meaning that IHT bills will likely rise exponentially with house price inflation as the average house price increased by 10.8 percent in the year to February 2022.
This is also a new record high of £278,123 average in the UK according to Halifax.
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