I think we are approaching a real inflection point in the IHT and Estate Planning world. And by ‘approaching’ I mean, in the next 2/3 weeks – the end of September let’s say. The reason I say this is because the rumour mill is once again in full force ahead of the Budget.
The date has been set for the 26th of November. This feels like the Government are kicking the can down the road as far as they can get away with in some vein hope that the assorted scandals will have blown over by then and economic data might have improved – I suspect they could be disappointed on both counts.
The delay has even caused frustration among the Scottish Government as it seems that Scotland will not be unable to pass its Budget ahead of the Christmas break.
What this delay does do however, is give us one final chance to put plans in place ahead of any changes announced in November. While nothing is certain, the following have all been rumoured with varying degrees of certainty:
- A ‘lifetime cap’ on gifting during one’s lifetime. There is little detail on what the cap might be or what the penalties will be on gifts in excess of it, however this would undoubtedly be a huge downgrade from the current position where gifts are (in practical terms) unlimited.
- This came up in the run up to the 2024 Budget, however it is once again suggested that the ‘7-year rule’ could turn into 10 years or even 14 years.
- While not directly related to IHT, it is suggested that there could be increases to capital gains taxes. Higher capital gains taxes generally make gifting harder and less desirable so this would have a knock-on impact on the estate planning options we have available.
- In addition, there are rumblings that we could see wider IHT reform. It is not clear what shape this would take, but I think we can probably agree it wouldn’t be good.
With this backdrop, it brings me back to the title of this post – If not now, then when?
If we are not going to take advantage of the current (in relative terms) very generous rules, then surely, we have to conclude that people wouldn’t then put plans in place after new, more punitive rules are announced?
Almost universally, when we complete an Estate Planning project for a client, the first thing they say is ‘Why didn’t I do this sooner?’.
As we reach the end of September and move into October, the ship will have sailed for many planning solutions and there will simply not be time to get things implemented ahead of Budget Day. As such, I say, for perhaps the final time, ‘the time is now’. Please, take action – while you still can!
