New online Inheritance Tax tool launched
Last month, HMRC launched a new online tool to help individuals or executors of an estate work out the approximate value of an estate and whether or not Inheritance Tax is likely to be payable upon it. The online tool aims to help executors work out if tax is payable and if so provides links to various support to help with what needs to happen next. HMRC make it clear that the tool is intended to provide guidance only, and is not an Inheritance Tax calculator. Users will need to know the approximate value of the assets in the estate before they are able to use the tool.
The tool can be accessed using the following link:
However, whilst this is a useful tool, there are a lot of things the link does not do. Inheritance Tax is not a simple tax, as there are a number of reliefs and exemptions which may apply which the Inheritance Tax tool do not take into account. The tool does not advise how much tax is payable, simply whether some tax is likely to be payable or not. It does not take any relevant reliefs into account, such as agricultural property relief and business property relief, and certainly therefore for those who own agricultural land or business assets which would likely qualify for relief against Inheritance Tax, the tool may not be particularly useful.
It is important therefore that individuals seek specialist advice about their Inheritance Tax position so that measures can be put in place at an early stage to try to mitigate any potential tax payable. The online tool provides a good starting point, but it does not compare to talking an estate through with a specialist advisor who can advise as to the application of the relevant reliefs and exemptions, together with options as to how to minimise any tax payable on the estate.
This is particularly important at this stage due to the potential changes which may come about during the Autumn Budget. I have previously written about the very real threat of changes to the Inheritance Tax regime, and again, given the economy’s position as a result of Covid-19, there is high speculation within the industry that changes are afoot. The chancellor, Rishi Sunak, has confirmed that the thresholds for Inheritance Tax however have been frozen until 2026, and so we know that the Nil Rate Band and percentage payable (40%) will remain the same for the next five years at least. We will not know what changes, if any, are to be brought into effect until the Autumn Budget, and so this next period is a critical stage for those wanting to try to discuss their succession plans under the current regimes, whilst we know exactly what we are dealing with in terms of taxes payable and ensuring that the various allowances and exemptions are utilised. There are already rumours of the Autumn Budget having to be delayed this year, and so this provides us with time to consider the position which we must make the most of.
If you would like to discuss your succession and Inheritance Tax planning, contact Manon Williams on 01239 710942.