Tories Propose New IHT Threshold

by Robin Pilgrim, LawAndTax-News.com, London

04 September 2008

The UK Conservative Party announced this week that it is proposing to raise the Inheritance Tax Threshold to GBP2mn, if elected.

This would represent a threefold increase in the current threshold for inheritance tax within the United Kingdom, and tops Chancellor Alistair Darling's suggested increase to GBP700,000.

Shadow Leader of the House of Commons Theresa May announced, according to a Press Association report this week, that:

"I am happy to confirm that our inheritance tax proposal will introduce a threshold of GBP1mn per person (not per couple). This means that it would be possible for a married couple to enjoy a threshold of GBP2mn".

Plans to substantially lift the IHT threshold were put forward at last year's Conservative party annual conference by Shadow Chancellor George Osborne.

Speaking to the Telegraph this week, David Searle, a tax partner at accountant Baker Tilly warned married couples and those in civil partnerships not to leave their tax affairs to chance, assuming that the recent IHT proposals will mean that they will escape the tax.

"That would be unwise," Mr Searle reportedly observed, adding:

"Obviously this plan would take a lot of households out of the inheritance tax net, but the devil is in the detail, and we do not yet know what restrictions there will be."

Chas Roy-Chowdhury, at the Association of Chartered Certified Accountants, was less reserved in his enthusiasm for the Tory proposals, and was quoted by The Scotsman as observing that:

"This is excellent news for many people who increasingly regard IHT as an unfair tax because it is a tax on assets that have usually been acquired out of taxed income."

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