Expert: Dan Goss, Researcher, Demos Facilitator: Rupert Neville, Consultant
Headlines:
- The importance of simplification of IHT so that the public can better understand it and therefore plan accordingly
- Currently there are too many misconceptions. Politicians appear to tinker around the edges to appease voters, rather than having a coherent story around their rationale for IHT
- IHT needs to take far more account that people are living longer, and care costs are rising significantly
Discussion points:
All agreed that the current IHT regime is over complicated and creates too much uncertainty. IHT needs to be better explained, as there are too many misconceptions.
The danger is that IHT planning, if not done correctly, results in long-term care costs being overlooked in any modelling. These costs cannot be forecast, and clients may be weighing them against the desire to gift money to help future generations.
While no one had issue with IHT at their current levels, there were genuine concerns if politicians removed IHT business relief, particularly from the likes of AIM.
IHT planning is a long journey for clients as it takes time for them to become familiar and engaged with the tax - but this can be guided by their advisers.
There was uncertainty around whether future governments would bring DC pensions, agriculture, and business property into future IHT calculations – and what this would mean both for planning and for markets.
While current thresholds for IHT were acceptable, there were genuine concerns if future governments removed reliefs from the likes of the AIM and wider business investments. It was felt this would be detrimental to the nation’s long-term economic growth plans, as investors would no longer have the incentive to invest in these markets.
Key takeaways:
- People need greater certainty around making sufficient provision for long-term care, so they can understand what they can afford to give away – bank of mum and dad. Without this certainty there is a danger they become a burden on the state
