Posted on Jan 29, 2015
2015 has the potential to be a very interesting year especially if you are advising Private Clients in Scotland; we have the final budget before the election, the General Election itself, the new devolved Scottish tax powers and the proposed radical overhaul of the law of Succession by the Scottish Government. In our two part preview of the year to come from a Private Client solicitor's perspective, partner Murray Etherington considers the potential capital tax changes and the proposed Succession (Scotland) Bill.
In terms of the budget and the General Election the biggest change is likely to be in relation to the capital taxes and in particular a potential increase in the Inheritance Tax ("IHT") exemption. Last week Chancellor George Osborne gave an interview to the Sunday Times in which he alluded to a Conservative manifesto pledge to increase the threshold.
The current IHT threshold is £325,000 and has remained at this level since 6 April 2009. Although the IHT threshold has remained static, house prices in the UK have continued to rise resulting in more estates paying IHT. The average house price in Britain in 2014 was worth £272,000 with certain areas of the South East of England having an average of £337,000. In 2013/14 less than one in 20 estates paid IHT, however the Institute of Financial Studies ("the Institute") forecast that this figure will rise sharply in the coming years particularly if the IHT threshold remains frozen until 2017/18. Stuart Adam and Carl Emmerson of the Institute state "By 2017/18 the threshold will have been frozen in cash terms for eight years – a reduction of 22 per cent or £70,700 relative to inflation."
It is of little surprise to hear that the Chancellor is mooting a potential IHT threshold increase given the Conservative party's continual comments on the desire for IHT to be paid only "by the rich". However, we have heard such promises before and it remains to be seen what approach will be set out by them in their manifesto and then, whether these pledges result in action.
The thorny problem of action is also a factor in the Scottish Government's proposed Succession (Scotland) Bill. The Scottish Government have promised to introduce the new Bill to ensure that the law surrounding a deceased's estate is fairer, clearer and more consistent. This Bill will deal mainly with technical matters and will cover, amongst other matters:
Whilst these changes are welcomed, not least because the profession have been waiting on them since they were recommended by the Scottish Law Commission (SLC) back in 2009, it is the proposed second phase of consultation that aims to radically overhaul and modernise the law of Succession in Scotland. This coming consultation will seek views on the following:
We will outline the detail of the proposed new rules in our next blog post. It is safe to say that the proposed Consultation paper could provide us with the fundamental overhaul which is needed to make sure that Scottish Succession laws are in line with societal changes.
Murray Etherington is a specialist Private Client Solicitor. We are always delighted to talk without obligation about whether we might meet your needs. Call Murray on 01382 229111 or email email@example.com
Categories: Private Client