General Election 2024: What does this mean for Inheritance Tax?

It is a common misconception that Inheritance Tax is a ‘rich persons tax’ but this is not necessarily the case.

Under the current government, the standard Inheritance Tax threshold (known as the Nil rate Band) is £325,000, and with the average net estate value in the UK in 2019/2020 being £334,173 and rising, it is easy to see why many families receive an unexpected tax bill following the death of a loved one.

For many people, their priority is to leave as much of their hard-earned wealth behind for their nearest and dearest as possible, and one way you can ensure that this happens is to seek professional advice. How a Will is drafted, and ultimately how a person’s estate is distributed following their death can have a monumental effect on the amount of Inheritance Tax payable. There are various Inheritance Tax reliefs available, depending upon your assets and personal circumstances, and therefore ensuring that these reliefs can be and are utilised is key!

The Chancellor has previously confirmed that the Nil Rate Band will be frozen at £325,000 until April 2028, but with the election looming, what are some of the different parties promising in respect of Inheritance Tax?

Conservative Party

Despite the rumours that the Conservative Party will abolish Inheritance Tax, this appears not to be the case in their manifesto.

The party commits to retaining key Inheritance Tax incentives such as Business Property Relief and Agricultural Property Relief, but provide no additional information on how these reliefs will be upheld.

Labour Party

The Labour party appear to have no plans to change the current Inheritance Tax system, but pledge to address unfairness in the current tax system, partly by ending the use of offshore trust structures which avoid Inheritance Tax.

Liberal Democrats

Another party who suggested abolishing Inheritance Tax is the Liberal Democrats, but their manifesto is silent on this altogether.

Reform UK

One of Reform’s tax policies includes abolishing Inheritance Tax for estates under £2m. They also pledge to reduce the Inheritance Tax rate from 40% to 20% of anything over this new rate.

With many of the parties manifesto’s remaining silent on Inheritance Tax, the future of Inheritance Tax is widely unknown. Therefore, it is now more important than ever to seek expert legal advice to ensure that you are making the most of your assets and reducing your Inheritance Tax liability wherever possible.