Budget 2012 sees govt renew IHT avoidance clampdown

by Sarah Ashcroft

Making a will is one of the most important things anyone can do to reduce their inheritance tax liability. It is a vital element of reducing tax bills if used effectively and efficiently.

In today's (March 21st) Budget, chancellor George Osborne signalled a renewed attack on people seeking to avoid tax, and inheritance tax is not being forgotten about. He said a crackdown on tax avoidance schemes, which avoid stamp duty land tax, corporation tax, inheritance tax and income tax, would take effect immediately.

It comes as a significant change of direction from last year's Budget, which introduced laws that actively encourage tax avoidance. That announcement laid the groundwork for the roll-out of a system that hands a ten per cent inheritance tax break to anyone leaving a tenth of their estate to charity. The move effectively cuts people's inheritance tax bill from 40 per cent to 36 per cent.

However, as can be seen by the renewed focus on tax avoidance schemes, the government is not being so generous to those who it feels are unfairly trying to dodge the taxman.

"We've increased both the resources and the number of staff working on evasion and avoidance at HMRC," said Mr Osborne.

"Taken together, the anti-avoidance measures in this year's Finance Bill will increase tax revenue over the next five years by around £1 billion - and protect a further £10 billion that could have been lost.

"This week, we have signed a further agreement with the Swiss to stop UK residents from evading tax."

Despite the new attack on tax avoidance, there are still plenty of ways for people to pay less inheritance tax. The first step is to make a will, which MoneySavingExpert.com notes is a "really sensible" move.

John Whiting from the Chartered Institute of Taxation recently set out the number of options for reducing inheritance tax. He told Daily Mail readers that they can pay less by gifting money to people about to get married and by leaving their estate to their spouse.

These are just two methods by which people can reduce their inheritance bill legitimately and without fearing that HMRC will come knocking.

Related articles

Published on: March 21, 2012

Did you like this article? Share it!

Last Will and Testament (DIY Will)

DIY will category image
  • Choice of Will form templates
  • Expert guidance manual 
  • All content lawyer-approved

Read More