The Budget 2014 And Inheritance Tax Implications
- AuthorBeverley Bowen
Wednesday 19th March saw George Osborne announce his 5th Budget as Chancellor. There was little news regarding Inheritance Tax. It was announced in the 2013 Budget the threshold for inheritance tax is to be frozen at £325,000 until the tax year 2017-2018 and this budget confirmed this.
The inheritance tax 10 year anniversary charge and exit charge for trusts are to be reviewed to make them simpler but the budget did not give any indication of what these changes will actually be.
George Osborne also confirmed that there is going to be further consultation in relation to the proposal to split the nil rate band inheritance tax threshold between trusts. Generally, the position at present is that if the trusts are set up on different days and are not connected they will have their own nil rate band threshold. The Government has however suggested that they want to change the rules so that all trusts set up by one person will have to share a nil rate band between them, however many trusts there are. This could have quite far reaching consequences for tax planning and I will be keeping a close eye on the developments on this front.
In relation to Capital Gains Tax the annual allowance will be increased to £11,000 in 2014-2015 and to £11,100 in 2015-2016 (as was announced in the 2013 Budget). For income tax purposes the level of tax free personal allowance will be raised to £10,500 in April 2015.