Trump’s ambition to scrap Inheritance Tax in America
Donald Trump’s ambition is to scrap Inheritance Tax (IHT) in America altogether. Whilst over on our side of the pond, the IHT allowance has remained unchanged since 2009 other than the introduction of the somewhat complex Main Residence Nil Rate Band (MRNRB) earlier this year. With the wealth of individuals increasing and the IHT allowance remaining stagnant, more IHT is being generated. To put this into perspective, it is expected that the revenue generated from IHT will grow by more than 30% by 2021/22 by £6.2bn.
In America, death duties are charged on estates worth more than $5.49m (£4.2m) whereas IHT here is charged on estates over £325,000 (or £650,000 for married couples). The pledge for the MRNRB was to increase the IHT allowance to £1m for married couples but the devil remains in the details with the MRNRB allowance only available to those who own a home or have children, grandchildren or stepchildren. Therefore, it is not only the extremely wealthy whose estates are subject to IHT, as in America.
Whilst we are not the most heavily taxed country in the world, it is advisable to keep your IHT exposure under closer review especially with the most recent changes to the IHT rules. There are a number of exemptions and allowances which are available that are often lost or not fully utilised to preserve your wealth for future generations.