IHT threshold on gifts to rise to £200,000
New limit will reduce paperwork for the taxman
A circular sent by the Association of
British Insurers to its 400 members last week has revealed that the
government is planning an increase in inheritance tax reporting limits on gifts
into trusts, raising the threshold from £10,000 to £200,000.
The Daily Telegraph reported that
the move is aimed at reducing paperwork for the taxman.
The circular says that HM Revenue &
Customs plans to raise the limit in 2007-08, so that gifts into trusts would
only be reported when exceeding £200,000 in a single year, or £250,000 built up
over 10 years.
The new threshold will benefit tens of thousands of people after the
chancellor (in the last Budget) expanded the kinds of trust affected by
inheritance tax to include both interest-in-possession trusts (IIP) and
accumulation and maintenance (A&M) trusts.
IIP trusts are frequently used by parents to provide an income for children
without giving them access to the capital, while A&M trusts are often used
by grandparents for school-fees planning.
HMRC refused to confirm the increased reporting limits but admitted that the
levels were under review, The Telegraph reported.
Further reading:
Elderly sisters lose inheritance tax battle
Traveling TV show offers IHT advice
1 in 5 homes will be above IHT threshold