The Conservative plan to increase the inheritance tax (IHT) threshold to £1m is nothing more than headline grabbing, according to Skandia.
While the provider does agree IHT has not risen enough in line with asset value increases, it doubts whether the Tories can realistically raise enough funds with the £25,000 per year ‘non-domicile' UK residents charge.
Skandia says it questions if there are enough people in this position to offset the majority of the current IHT tax take.
“There are many non-domicile people resident in the UK who will be making modest sums of money abroad but are unable to afford a tax charge of £25,000 each year and many of the richer business people who fall into this category will be quick to find a way around the new tax, perhaps by leaving the country,” Skandia tax and financial planning head Colin Jelley says.
He believes the Conservatives are “taking a gamble” with this proposal.
“The current inheritance tax take for the Government is certain and steadily increasing,” Jelley says.
“George Osborne (Conservative Shadow Chancellor) is proposing to swap this certainty of income for a new tax that is unproven.
“We strongly support raising the IHT threshold but it must be affordable. As always the devil is in the detail and until we see this it is very difficult to know how effective this new tax might be.”
Have your say:
"Didn't realise Skandia were part of the Labour Propaganda machine."
Graham Bowser, director, QS Financial Planning Solutions
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