The Chancellor set out his Budget earlier this month, and some breathed a sigh of relief as many rumoured tax hikes were not announced. Inheritance tax was one area where some experts suggested major reforms could be made in order to raise funds, but Mr Sunak only froze nil-rate bands at existing levels until April 2026 However, with the Government’s Tax Day coming up on Tuesday, some believe inheritance tax could be considered for reforms. Steven Cameron, Pensions Director at Aegon warned rates could be increased or exemptions reduced.

He said that another change that could be considered is bringing death benefits from pensions into the scope of inheritance tax.

He told the Financial Times: “Death benefits from pensions are currently typically paid at the discretion of trustees or schemes administrators and are free of IHT.

“When saving in a pension, the vast majority of people are doing so to provide a retirement income, rather than to pass on an inheritance.

“Bringing accumulated pension funds or ‘death benefits’ into an individual’s taxable estate of death would seem particularly harsh and unjustified.”

This sentiment was echoed by George Bull, a senior tax partner at RSM.

He told the Telegraph that issues like indexing capital gains to inflation, as well as capital gains tax’s interaction with inheritance tax could feature as the Treasury takes a hard look at generous quirks that encourage business owners to hang on to their companies until they die.

He said: “At the moment we’ve got this situation where assets can flow tax-free to the next generation if the numbers fit.”

Mr Cameron also spoke to Express.co.uk earlier this month, and warned that inheritance tax could be in Rishi Sunak’s “firing line.”

He said: “Wealth taxes could be put in the firing line because if Rishi Sunak wants to be seen as making the wealthy pay, you might increase wealth taxes or reduce exemptions.

“Capital gains tax is one and inheritance tax could be another.”

On pensions, Mr Cameron also warned that the Chancellor may break a Conservative Party manifesto pledge and abandon the triple lock.

READ MORE:State pension warning as savers set for ‘disappointment’

“We have got a manifesto commitment on the pension triple lock and tax triple lock, with all of these locks he’s got more locks than Houdini to grapple with.

“At some point, the Government might decide we have to be open with the public and say, ‘If we stick with these manifesto commitment we will have too many restrictions to do what is right to do.’

“He’s not done it so far, but in future there may come a time when he has to level with the public.”



Source link