The Conservative’s proposal to increase the inheritance tax threshold to £1m is aimed at “grabbing headlines and winning votes” according to Skandia.
Skandia believes the IHT threshold, which currently sits at £300,000, should be increased to keep up with the rise in house prices but claims £1m is unrealistically high.
Skandia head of tax and financial planning Colin Jelley says the revised limit must be affordable given the nation’s current economic situation and questions whether the Conservatives will realistically be able to raise enough money to pay for this tax cut by charging non-domicile UK residents a flat rate of £25,000 per year.
He says: “The Conservatives have proposed a new tax designed to replace the revenue lost by the very significant increase in the IHT threshold but they are taking a gamble with this proposal. The current inheritance tax take for the Government is certain and steadily increasing. George Osborne is proposing to swap this certainty of income for a new tax that is unproven.
“We strongly support raising the IHT threshold but it must be affordable. As always the devil is in the detail and until we see this it is very difficult to know how effective this new tax might be.”