Government seeks views on its inheritance tax plans

01/07/2011

The Government is seeking views on its plans to reduce inheritance tax (IHT) by 10% for estates that support charities.

The proposal is to reduce IHT by 10% when at least 10% of an estate is left to charity. This would reduce IHT from the standard 40% to 36% for qualifying estates.

Research by the Financial Times suggests 5,000 people a year will increase their charitable donations as a result of the tax cut, which is due to come into effect in April next year. The move is expected to cost the Treasury an estimated £170m by 2016.

The Treasury has begun a consultation on the best way to implement the policy.

Justine Greening, Economic Secretary to the Treasury said: “The British public are some of the most generous donors to charitable causes in the world.

“This reduced rate of IHT should provide an extra incentive for people to use their estate to support worthy causes and we very much hope that this consultation will mean we can get the details right so it can make a real difference.”

The inheritance tax threshold is currently £325,000. Last year, IHT was paid on more than 15,000 estates in the UK.

Please contact us if you would like more information about the issues raised in this article or any aspect of inheritance tax planning.