Rishi Sunak recently announced the second Budget for 2021, and the lack of increase for
Inheritance Tax (IHT), and Capital Gain Tax (CGT) allowances didn’t go unnoticed. Pension tax relief also went unmentioned.
We had expected to see some changes to CGT following recommendations for major changes from the Office of Tax Simplification. They suggested aligning rates with income tax, scrapping the CGT uplift on death, and reducing allowances.
CGT generated a whopping £10.6 billion in 2020 which is set to increase this year due to
continuously increasing property and investment prices. However, nothing has changed regarding this tax, bar a move to increase the timeframe people who sell property must pay the tax. This will now be 60 days, as opposed to the previous 30 days.
This decision came after industry bodies urged the chancellor to address this issue. Rishi Sunak was written to in September by Accounting body the Association of Accounting
Technicians with concerns about the ‘unreasonable’ reporting deadline which resulted in more people faced with significant fines from HMRC. CGT was not tackled in the first Budget back in March, except for an annual exemption, and IHT thresholds frozen until 2026. The nil rate band and residence nil rate band will remain frozen until April 2026.
We also expected changes to IHT. There have been reports that have suggested reform to IHT rules including lifetime gifts, the exemptions, and the CGT-free uplift on death, and bringing death benefits from pensions into scope of IHT.
As we discussed in a recent blog post (which you can read here), IHT receipts are rising, and
many people are finding themselves over the threshold now.
The most recent Budget has announced no major changes to IHT, CGT or pensions tax relief.
If you are concerned about tax and are looking to protect your assets then get in touch with
Kindred Estate Planning today.