Government plans could force upfront inheritance tax payments

Updated
BR2HJX Actual last will and testament with eyeglasses on wooden desk will; last; will; and; testament; agreement; bequeath; cont
BR2HJX Actual last will and testament with eyeglasses on wooden desk will; last; will; and; testament; agreement; bequeath; cont



New plans proposed by the Government could mean some savers are forced to pay inheritance tax during their lifetime.

As part of a drive to combat tax avoidance, the plans - which have been put out for consultation - would allow HM Revenue & Customers to force "accelerated payment" laws on anyone deemed to be benefiting from complex schemes aimed at reducing the amount of money they owe when they die.


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That means that those suspected of using avoidance schemes could be forced to pay huge sums of inheritance tax up front, until the HMRC and the courts come to a decision as to whether the scheme is indeed legal.

The Government's particular concern is that some Brits are using trust funds - which can hold assets including property, shares and insurance policies - to remove them from their estate, thereby significantly reducing the money owed upon their death.

While the rules state that only those trusts believed to be used specifically for the purpose of tax avoidance would be investigated, industry experts fear that people will be treated as "guilty until proven innocent".

The current threshold for inheritance tax is £325,000, with the taxman taking 40 per cent of any estate above that amount.

But with house prices rising, many more Brits will be over the threshold, and it is feared these new plans will hit middle class families, rather than the "very small numbers" of wealthy people the HMRC claims will be affected.

Stuart Phillips, from tax planning firm the Private Office, told the Telegraph: "The concern is that the Revenue takes a highly aggressive stance, just like with the film schemes for which celebrities have been under scrutiny, and terrifies families who have been engaging in legitimate tax planning that has been used for many years.

"I'm apprehensive that large-scale action could have unintended consequences."

What do you think about these proposed plans? Leave your comments below...

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