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Loophole is closed but Pets get a reprieve

The Chancellor has clam ped down on an inheritance tax loophole which enabled people to avoid IHT through gifts of property.


The move is part of a range of measures to tighten up IHT rules. Potentially exempt transfers remain but people receiving them will have to account for details of any chargeable transfers made by the deceased within the seven years before their death.


The property clampdown follows a recent case brought by the Inland Revenue, where the House of Lords ruled in favour of Lady Ingram, who planned to avoid inheritance tax by taking out a lease on her home while gifting it.


Industry commentators had feared that potentially exempt transfers would also be axed.


The Chancellor raised the IHT threshold by £8,000 to £231,000 from £223,000.


Scottish Equitable personal investment development manager Richard Leeson says: “We are relieved that the Government did not crack down any harder.”


The Association of International Life Offices also welcomes the moves. Ailo tax committee chairman and Scottish Provident technical development manager Bob Easton says: “It will benefit the life industry because it encourages people to consider investments in other assets rather than gifts of land.”


Scottish Life International marketing director John Allison says: “We are relieved the Chancellor has acted sensibly by not abolishing Pets. They are a good way for parents to pass money on to their children. We expected the Government to get rid of the property loophole.”

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