UK Inheritance Tax Freeze Extended To 2030

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Post on Oct 30, 2024

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Inheritance Tax Freeze: Good News or Bad News?

The UK government has extended the freeze on Inheritance Tax (IHT) thresholds until 2030. This means that the current thresholds for IHT will remain unchanged for the next eight years. But what does this actually mean for you and your loved ones?

What is Inheritance Tax?

Inheritance Tax is a tax levied on the estate of someone who has passed away. It applies to the value of assets passed on, including property, investments, and savings. The current threshold for IHT is £325,000, meaning you can pass on that amount of money tax-free. Anything above that threshold is taxed at 40%.

The Freeze: A Mixed Bag

While the freeze might seem like good news on the surface, it could have some negative consequences.

Good News:

• More money for your loved ones: The freeze means that more of your estate can be passed on tax-free.
• Planning opportunities: You'll have more time to plan your estate and minimize your tax liability.

Bad News:

• Rising house prices: With house prices continuing to rise, more people will be pushed over the IHT threshold.
• Inflation: The value of the IHT threshold will diminish over time due to inflation.
• Potential for future increases: The freeze only applies to the next eight years. After that, the government could raise the thresholds.

The Takeaway

The freeze on Inheritance Tax thresholds is a double-edged sword. While it offers some short-term benefits, it could lead to higher tax bills in the long run.

If you're concerned about Inheritance Tax, it's important to seek professional advice from a financial advisor. They can help you understand the implications of the freeze and develop a plan to minimize your tax liability.

Tip: Don't forget to review your estate plan regularly, as it's crucial to keep it up-to-date with any changes in your circumstances or the law.