Saffery Champness moves to address inheritance tax knowledge gap following HMRC findings

Jamie Younger

Of the 2090 individuals surveyed, only 45 per cent were aware of the tax implications around making gifts. Older, wealthier people with a likely larger exposure to IHT were better informed in general.

In its latest Landed Estates Annual Review accountancy firm Saffery Champness covers the basic rules and exemptions, including lifetime gifts, gifts to spouses and civil partners, gifts out of surplus income and exempt gifts; reliefs including Agricultural Property Relief and Business Property Relief; and other practicalities including Wills.

Jamie Younger, Partner, Saffery Champness, and Head of the firm’s Landed Estates and Rural Business Group based in the Edinburgh office, said: “Inheritance Tax is a complex area and the recent research for HMRC shows just how scant the level of understanding about it is. Charged at 40 per cent on death, once the standard nil rate band and any other available IHT reliefs are exceeded, clearly this can present a significant hit to the value to be passed down to the next generation. A steady increase in property values has led to a greater number of people paying IHT on their estate, although this has been mitigated in part by the main residence nil rate band, which is relevant where the deceased leaves a residential property, that was their main residence at some point, to a direct descendant. The main residence nil rate band increases to £175,000 from 6 April 2020 from the current level of £150,000.

“The rural sector is fortunate in that, currently, Agricultural Property Relief (APR) and Business Property Relief (BPR) could be available for certain assets. Careful planning is essential to ensure that the IHT position of the farm or estate business is not jeopardised.

“Given this new research for HMRC our latest article will be helpful as an overview of the rules, the main issues and measures available to mitigate exposure.”

The Saffery Champness overview, Keeping Inheritance Tax Simple is available here

The Research by NatCen Social Research for HMRC Lifetime Gifting, Reliefs, Exemptions and Behaviours is available here.