The FT have reported that the government could consider imposing restrictions on a key tax relief used to shelter money from inheritance tax after the next election. This is in addition to suggestions that a Conservative government may increase the threshold at which the tax kicks in currently at £325,000, potentially increasing this to £1m.
Minor changes could be bought into current rules which remove ‘qualifying assets’ from an estate for IHT after 2 years.
Business relief was introduced in 1976 to mitigate the inheritance tax bill faced by business owners by excluding their business assets from IHT when it was passed on to family members. The rule has evolved over the years and now covers any unlisted asset held for 2 of the previous 5 years and still owned on death. A possible change would mean the asset having to be held for a number of years after death by a named beneficiary.
The FT states that this relief was originally introduced to allow business owners to pass on their asset from generation to generation. However there is currently no restriction to stop the beneficiary from selling the asset.
You can view the full FT article here