The Spring Budget- what does it mean for Inheritance Tax?

The Chancellor of the Exchequer Rishi Sunak recently delivered his spring Budget setting out the Government’s plans for taxation and spending for the upcoming financial year. This contained several important measures aimed at restoring control of public finances gradually and to tackle the ongoing challenges brought about by the coronavirus pandemic.

But what does it mean for Inheritance Tax?

Business Property Relief

Much of this discussion prior to the budget was focussed around the rules on Business Property Relief. Business Property Relief allows an investor to achieve 100% mitigation from Inheritance Tax on Business Property Relief assets held for two years and until death.

Not every business qualifies for Business Property Relief, but shares in a qualifying company listed on AIM, the growth market of the London Stock Exchange, do. We have been successfully managing AIM Inheritance Tax portfolios since 2004, significantly outperferming the AIM Index.

Mr Sunak made no changes to the rules on Business relief which seems in line with his position to support small businesses. Our report available from the link here and below explains more about Business Property Relief.

Personal Tax Thresholds

One area where Rishi did cover Inheritance Tax was in his decision to freeze all personal tax thresholds until 2026, including Capital Gains Tax, Income Tax, Inheritance Tax and the Pensions allowance.

The Inheritance Tax threshold freeze includes both the nil rate band and the residential nil rate band.

These thresholds were expected to rise with inflation as an individual’s income increases, but as this will no longer be the case, more individuals will find themselves with an Inheritance Tax issue on the horizon as they move towards 2026.

One simple and popular Inheritance Tax planning solution remains an AIM Inheritance Tax (‘IHT’) portfolio which will give full IHT mitigation after only two years while also enabling the investor to retain access to funds. An AIM IHT portfolio can also sit within an ISA.

You can find out more about Fundamental Asset Management’s high performing AIM IHT ISA and AIM Inheritance Tax portfolio service, which has been delivering exceptional investment returns for more than 16 years, from the link here. We also have an Adviser Centre with a wealth of information to support financial advisers including case studies, adviser webinars, guides and contact details.

Join us for our webinar at 2pm on 25th March 2021 where we will be discussing Are AIM tax reliefs at risk? You can register from the link here.