Inheritance and capital gains tax allowances frozen
By Sonia Rach 3
Image credit: HM Treasury
Chancellor Rishi Sunak has announced that he will be freezing a number of tax allowances, including the pensions lifetime allowance, inheritance tax thresholds and capital gains tax thresholds.
In the Budget today, he said it is fair “to ask more of those who can afford to contribute to protect those who cannot.”
However, Quilter tax and financial planning expert Rachael Griffin says: “Politically, the chancellor doesn’t want to be seen to be increasing taxes, or reducing any allowances, in this economic environment and one stealthy way of avoiding these fiscal constraints is to raise tax by the back door by freezing personal tax thresholds, the pensions lifetime allowance and the annual exempt amount for CGT. So for now, Sunak has started a fiscal ice age by freezing the tax rate thresholds after they increase in 2021/22, which will remain frozen un
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Chancellor Rishi Sunak will announce his long-awaited Budget on Wednesday, March 3, which will mark one year since the Chancellor first introduced a number of generous Covid relief packages to see the UK through the pandemic. However, this year s Budget is not expected to be as generous as it was in 2020, with Britain now facing a looming fiscal blackhole due to significant lockdown borrowing. There are mounting concerns the Chancellor could take this opportunity to hike taxes in order to help recuperate some of the funds lost to the pandemic - and many are concerned the announcement tomorrow could spell major changes to Inheritance Tax.
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Camilla Bishop, Partner at law firm DMH Stallard, said: “It is highly unlikely that the Chancellor will overhaul the Inheritance Tax regime on Wednesday.
“IHT is complex and the potential ramifications mean any changes need to be carefully thought through – something the Government just has not had time to do in recent months.
“The recommendations in the All Parties Parliamentary Report of January 2020 were radical with the introduction of a ‘gift tax’ and dispensing with Capital Gains Tax uplift on death.
“Such changes would mean it is virtually impossible to pass on wealth without suffering tax.
Inheritance Tax changes: There’s usually no Inheritance Tax to pay on small gifts made out of normal income (Image: GETTY)