28 May 2020 - Article
The Budget and second Finance Bill may include some of the measures announced by the previous government, but not included in the Finance Act 2015. A key point of interest for legacy officers is a possible review of deeds of variation, which received much press scrutiny in the run up to the election.
The government also pledged to increase the IHT threshold on main residences to £1 million, in the form of a £175,000 'family home allowance' per person (£350,000 per couple). This would effectively allow parents who have assets worth up to £1 million to pass these IHT free to the next generation. This complex and controversial measure will undoubtedly impact on the way in which wills are drafted in the future, in particular nil rate band clauses.
It is also expected that the budget will remove the so-called Frankland Trap, whereby if appointments are made out of a discretionary will trust within 3 months of death, they are not written back into the Will for IHT purposes. At present this potentially leads to an inadvertent IHT charge for the unwary. Going forward, executors/trustees will no longer have to wait for 3 months to expire to make such appointments.
Click here to see HMRC's latest publication on current and future tax measures in 2015.