a surge in enquiries<\/a> in recent weeks from customers concerned that Reeves will raise taxes in her Budget.<\/p>\nAt present, in the UK, anyone can give up to \u00a33,000 free of inheritance tax (IHT) annually. Another option is the \u201cpotentially exempt transfer\u201d, also known as the seven-year rule, in which any gift can be given free of IHT as long as the benefactor survives seven years. If the benefactor dies before the end of the seven-year period, \u201ctaper relief\u201d will reduce the tax payable on gifts given between three and seven years before.<\/p>\n
The chancellor last year cast the IHT net wider to include some farm and business owners from next spring, who will pay a 20 per cent levy above a \u00a31mn threshold, and unused pension pots from April 2027, at 40 per cent.<\/p>\n
Nimesh Shah, chief executive of tax adviser Blick Rothenberg, said that \u201cthe UK has a very generous gifting regime\u201d and noted that it was \u201cdefinitely an obvious target if you want to raise more money through inheritance tax, which this government clearly wants to\u201d.\u00a0<\/p>\n
The UK could impose a 10-year limit on gifting, or follow the US by capping the amount someone can gift in a lifetime, he said. The US limit is $13.99mn, a sum that appears large but \u201cmaybe isn\u2019t a huge amount\u201d because it includes gifts to children and school fees, he added. <\/p>\n
Rachael Griffin, tax and financial planning expert at Quilter, said any changes to the lifetime cap would \u201ccapture not just large transfers designed to reduce tax bills but also modest, routine support between family members\u201d.<\/p>\n
Quilter\u2019s research shows that UK retirees gift about \u00a32,500 a year to loved ones, much of it to help with education and living costs.<\/p>\n
\u201cWithout careful thresholds and exemptions, a cap risks discouraging these transfers, limiting the flow of wealth through the economy, and unfairly penalising families who make regular small gifts over many years,\u201d Griffin added.<\/p>\n
Chris Etherington, tax partner at RSM UK, suggested that options to expand IHT could include extending the seven-year period to potentially 10 to 14 years.<\/p>\n
Some tax experts have cautioned against the view that the policy would give the immediate boost to the public coffers that the Treasury is seeking. <\/p>\n
Emma Chamberlain, a barrister at Pump Court Tax Chambers, said extending the seven-year rule to 10 years \u201cwon\u2019t raise much money quickly\u201d for the government. <\/p>\n
A lifetime cap would also be unlikely to raise money, as people would\u00a0simply\u00a0delay transferring assets\u00a0above the cap\u00a0in the hope that a different government would abolish the policy, she added.<\/p>\n
Iain McLeod, head of private clients at St James\u2019s Place, said people will have to engage in succession planning earlier on in life, especially \u201cfamily businesses and owners of farming businesses where the premature death of an owner and a resulting IHT charge could trigger a crisis of liquidity\u201d. <\/p>\n
But gifting to the next generation was one method privately owned businesses were considering to avoid this new tax exposure.<\/p>\n
Neil Davy, chief executive of Family Business UK, whose research covers more than 130,000 companies, said a lifetime limit on gifts would be \u201canother hurdle\u201d for his members and was \u201cclearly unwelcome\u201d. <\/p>\n
\u201cPeople could withhold capital investment, freeze hiring, consider redundancies, sell a part of the business to pay for it, or at the other extreme they could move overseas or sell up,\u201d he added.<\/p>\n
The Treasury said \u201cthe best way to strengthen public finances is by growing the economy\u201d. <\/p>\n
It added: \u201cWe are committed to keeping taxes for working people as low as possible, which is why at last Autumn\u2019s Budget, we protected working people\u2019s payslips and kept our promise not to raise the basic, higher or additional rates of Income Tax, employee National Insurance, or VAT.\u201d<\/p>\n
Additional reporting from Sam Fleming in London<\/p>\n","protected":false},"excerpt":{"rendered":"Wealth managers say their clients are increasingly worried the Treasury could crack down on the UK\u2019s \u201cgenerous\u201d inheritance…\n","protected":false},"author":2,"featured_media":81301,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[39],"tags":[28,147,530],"class_list":["post-81300","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-business","tag-personal-finance","tag-personalfinance"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/81300","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=81300"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/81300\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/81301"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=81300"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=81300"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=81300"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}