Jeremy Hunt could move towards scrapping inheritance tax in Autumn Statement

The controversial inheritance tax which imposes a hefty 40 percent levy on those inheriting assets above certain thresholds could soon be ditched.

Jamie Nice, director at accounting firm Rickard Luckin, said Chancellor Jeremy Hunt could announce some changes in next month’s autumn statement.

He said: “There have been strong suggestions that the Conservatives will look to win votes ahead of the election by removing inheritance tax altogether.

“Whilst this is unlikely to be announced in the autumn statement, the Chancellor might make the first step in that direction by reducing the rate at which inheritance tax is paid from the current level of 40 percent or by increasing the level at which a deceased’s beneficiaries start to pay inheritance tax (the nil rate band) from the current rate of £325,000.”

The 40 percent levy applies to any total assets above the nil rate band a person is inheriting – the band is doubled when inheriting for couples, with no tax to pay on the first £650,000 of the estate.

Mr Nice added: “The nil rate band has been at the current level since April 2009 and is due to remain so until at least April 2028, it would seem unlikely that Mr Hunt will look to increase this now but with the number of families paying inheritance tax increasing year on year this could be seen as a potentially popular move.”

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The Chancellor previously rules out anouncing any new tax rises in the autumn statement although he warned he would have to make “difficult decisions”.

Mr Nice suggested Mr Hunt may ease other tax thresholds to help Britons struggling to pay their bills. He explained: “With significant wage inflation over the last year, a greater number of employees are now paying the higher rate of income tax (40 percent), according to a report by the Institute of Fiscal Studies this is now at the highest level ever.

“The level of inflation wasn’t necessarily anticipated when the Government froze Income Tax allowances and thresholds in 2022, a policy known as ‘fiscal drag’.

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“It has been muted that the Chancellor might decide to ease the pressure on households by breaking away from this policy and increasing the current higher rate tax threshold of £50,270.”

However, the wealth expert said the Chancellor may be considering raising capital gains tax rates, which are currently 28 percent for residential property and 20 percent for other chargeable assets.

He said: “It has been anticipated that capital gains tax rates might be increased to become more in line with income tax rates particularly if we are to see a change in Government.

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“The Conservatives might see this as an acceptable way to increase taxes in this autumn statement and in doing so providing greater scope for tax cuts elsewhere to provide some welcome relief to the cost of living.”

Another pressing question for the Government is what to do about the state pension increase, with the triple lock policy currently set to deliver a sizeable 8.5 percent increase to payments next April.

Mr Nice said: “There have been question marks over whether the Government will remain committed to this level of increase, if not then we might see a move away from the triple lock in the autumn statement.”

There were previously reports the Government was considering reducing the increase to 7.8 percent, by using the figure for the increase in average earnings not including bonuses, rather than the overall increase figure.

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