IHT product providers have denounced today's call for Inheritance Tax to be scrapped, branding it "headline grabbing" and a "vote pleaser".
They add abolishing the tax would have little impact on their businesses as IHT customers usually buy other investment products at the same time.
One also says consumers should not to be distracted by the proposals warning they should “still be looking to carry out IHT planning under the current rules”.
Steve Mythen, technical consultant at IFA services provider firm threesixty, says: “It’s interesting really.
"They [the Conservative party] would have to get into power first before they could do it. It’s not going to happen under this Government because it is a bit of cash cow.
“Today’s announcement is a bit of a headline grabber really, a vote pleaser.
“But it could have a major impact. If it goes, the IHT side of financial planning advice would no longer need to exist. It would depend on whether IFAs charge separately for IHT advice or include it in the whole package.”
Legal & General spokesman Mike Connelly adds: “Abolishing IHT would certainly simplify the need for estate planning, but clearly people would still need to take financial advice on how they manage their accumulation of assets.
“If IHT is scrapped it would not have a huge effect on our business because the kind of customer that would invest in a bond would still want to do that for income. There would simply not be the need to take the extra precautions.
“It wouldn’t be that big a deal or a problem.”
Margaret Jago, technical manager at AEGON Scottish Equitable, says the Conservatives would need to replace £4bn in revenue should it pull the controversial tax.
“In 2002 the number of people with estates over the IHT threshold was around two million,” she says.
“Today, more than four million people are affected so it is easy to see why the Conservatives’ economic competitiveness group feels this tax is unfair and should be abolished.
“If the IHT threshold was increased in line with recent house price inflation it would currently stand at around £450,000. So another possibility would be to raise the current IHT threshold, which would mean more people are exempt from this tax.
“If indeed this proposal was to become accepted Conservative policy, and they were to gain power and abolish IHT, they would have to look at other ways to replace the £4bn loss in revenue. It’s likely other taxes would have to be increased.
“AEGON welcomes a debate on the future of IHT as this proposal adds even more uncertainty in the market. Individuals should still be looking at carrying out IHT planning under the current rules”.
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