Estate planning remains prudent regardless of debate about IHT’s future, Kingsley Napley says.
A YouGov poll* commissioned this week by law firm Kingsley Napley shows a majority of the public now supports the complete abolition of inheritance tax (IHT).
The findings come in the wake of media reports last weekend that Rishi Sunak is said to be considering this as a Conservative party policy measure going into the next general election, along with a nearer-term slashing of the current 40% rate at which IHT is levied in next March’s budget.
Interestingly, when Kingsley Napley / YouGov asked the same question in October last year, following Liz Truss & Kwasi Kwarteng’s so called mini-budget, support for the total abolition of IHT fell slightly short of a majority, showing there has been a definite shift in public sentiment on inheritance tax.
This week’s poll also asked to what extent those surveyed would support the Government raising the threshold at which estates are required to pay IHT and checked the public mood on a potential increase in the levy. The results are shown in the tables below, with the figures in brackets representing the feedback when the same questions were asked in October 2022 (NB rounding has been applied):
And the breakdown of responses by political party alignment was:
|
|
|
CONSERV |
LAB |
LIB DEM |
|---|---|---|---|---|
|
Abolishing IHT completely |
Support Oppose |
70% 21% |
39% 51% |
43% 49% |
|
Raising the £325k threshold at which the estate of the deceased is required to pay inheritance tax |
Support
|
77% 14% |
62% 24% |
71% 22% |
|
Increasing the current 40% IHT rate |
Support
|
9% 84% |
23% 62% |
18% 73% |
James Ward, Partner and Head of Private Client at Kingsley Napley, says: “We know IHT is regarded by some as a double taxation given people already pay income tax during their lifetime and it is often described as one of the most hated taxes. It is hardly surprising that a strong majority of Tory voters, would support the scrapping of the tax or at least raising the threshold at which it kicks in because they are typically older and wealthier. However, it is notable that a majority of Labour voters also support the idea of raising the threshold and oppose any increase in the 40% rate.
“The Labour party has ruled out a Wealth Tax should they come to power. We still await their official view regarding IHT, which I’ve long said is the UK’s equivalent of a wealth tax, however there are suggestions they may look to curb some exemptions. They may like to look at our poll results. Clearly IHT is not seen as a popular way to plug the gap in public finances, even among younger voters.”
The breakdown of responses to the Kingsley Napley / YouGov poll by age profile is shown below.
|
|
Age |
SUPPORT |
OPPOSE |
DON’T KNOW |
|---|---|---|---|---|
|
Abolishing IHT completely
|
18-24
|
42% 55% 55% 57% |
32% 32% 36% 31% |
25% 13% 8% 12% |
|
Raising the £325k threshold at which the estate of the deceased is required to pay inheritance tax |
18-24
|
39% 62% 71% 73% |
26% 19% 20% 17% |
35% 19% 8% 9% |
|
Increasing the current 40% IHT rate
|
18-24
|
18% 14% 15% 11% |
53% 70% 74% 78% |
29% 15% 11% 10% |
James Ward, Partner and Head of Private Client at Kingsley Napley, continues: “Decades of house price growth across the UK has meant more and more households have fallen into the threshold for paying IHT because the nil-rate band has been frozen since 2009. However, the tax still only impacts 27,000 estates, mostly in London and the South-East, delivering less than 1% of the total UK tax take. The IFS recently calculated that this figure will likely grow in future even if the current IHT regime remains untouched due to inflation and rising property prices, albeit the property market has slowed significantly in recent months.
“Given IHT regime change is by no means certain, we recommend those in scope should continue with prudent estate planning,” James adds.
Steps often recommended to reduce inheritance tax liabilities include:
- Capital gifting: Sizeable transfers seven years before death;
- Income gifting: eg Contributing to grandchildren’s school fees or an offspring’s mortgage;
- Exemptions: Using all nil rate bands. Business relief in particular can lead to big savings;
- Life insurance: Arranging for this to be paid out to family members (insurance pays the tax);
- SKIing: Spending the Kids Inheritance.
ENDS
For press enquiries, please contact:
Louise Beeson at Bell Yard Communications: Louise@Bell-Yard.com/ 07768 956997
NOTES TO EDITORS
*On 26-27th September 2023, YouGov surveyed 1700 adults representing a cross-section of the UK population by socio-economic class, region, age and political voting record to seek their views on potential inheritance tax rule changes. The same fieldwork was undertaken last year between 20-21st October 2022. Both surveys were carried out online. The figures have been weighted and are representative of all GB adults (aged 18+). The above summary figures have been rounded. The full YouGov poll data set can be viewed here:
Kingsley Napley ‘s ‘Inheritance Tax Premier League’ shows which areas pay the most inheritance tax by local authority based on HMRC data – see our article for more details.
About Kingsley Napley
Kingsley Napley LLP is a leading UK based law firm providing expertise for our clients’ business and private lives, when it matters most. We advise in the following areas: corporate and commercial, criminal, dispute resolution, employment, family & divorce, immigration, medical negligence & personal injury, private client, public law, real estate & construction, restructuring & insolvency and regulatory law. The firm is proud to have been named “Best Law Firm to Work For in the UK” by Best Companies in Q1 and Q2 2023. For more information see www.kingsleynapley.co.uk.
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