Adviser unsurprised by inheritance tax change

Date: 19th August 2009

The recently-announced changes to inheritance tax rules have not come as a surprise to one financial firm.

Advisory service Calculis said that the reform could have been designed to help pay back the government's "huge budget deficit".

Under the changes, families who pay inheritance tax more than six months after their relative's death will have to pay three per cent interest on this amount.

Previously, the rate stood at zero.

Meanwhile, the rate paid by HM Revenue & Customs to customers, for previously overpaid inheritance tax, has been reduced to 0.5 per cent.

Alex Pegley, director of Calculis, said: "This is just a way to increase the state tax take a little bit really and is a nice easy way of doing it and shouldn't ruffle any feathers."

He added: "It may only have a small impact but it all helps at the minute as far as the government's huge current budget deficit is concerned."

Current inheritance tax rules involve a 40 per cent levy on all assets held in a deceased person's estate, which are worth more than a collective £325,000.

The chancellor of the exchequer predicted earlier this year that Britain's national deficit would increase by £175 billion this year.

This rise will partly be caused by falling corporation tax and capital gains tax revenues in the credit crunch and recession.