Those who fall inside new inheritance tax thresholds can avoid unnecessary payments with simple planning, according to a tax expert.
Chancellor George Osborne has announced that the government is to scrap its election pledge to reform the inheritance tax system and instead freeze the level at which it becomes payable at £325,000 until at least 2019.
This means around four million more people, including owners of an average home across many areas of Britain, could become liable for inheritance tax.
But, John Rouse, head of the wills and tax planning department at Midland law firm Wright Hassall, explains that this could be avoidable.
He said: “These new inheritance tax rules will bring even more people into taxation.
“Historically, inheritance tax thresholds have risen in line with inflation but they have been frozen since 2009.
“The original inheritance tax thresholds and gift allowances were set so that inheritance tax was originally a tax on the wealthy.
“However, the freezing of thresholds has effectively made inheritance tax a tax for middle England with an increasing number of people becoming liable.
“While more people are falling within the tax system, many of those people are could avoid paying tax through straightforward planning.
“HMRC tax rules allow considerable opportunity for inheritance tax planning. HMRC themselves publish examples of how to use various tax exemptions and, while there has been considerable publicity regarding tax schemes used by large corporates and celebrities such as Jimmy Carr, people can carry out non-controversial tax planning arrangements that are essentially endorsed by HMRC.
“Although there has been considerable focus on tax schemes, at the other end of the scale, there are a number of tax planning opportunities which, with appropriate planning, carry little or no risk of attack by HMRC.”