The UK must be seen to be competitive in attracting investment to the UK in a post-Brexit world, in order to encourage families to move rather than increasing tax burdens, say leading tax and advisory firm Blick Rothenberg
Robert Pullen, a partner at the firm said: The country is now at a Brexit crossroads where some sort of deal may be done over the next few days and weeks. It is absolutely critical that the UK now looks at how it treats people who wish to invest in the UK and live here.”
He added: Over the summer, there was much speculation that Inheritance Tax would be increased or business reliefs from the tax would be restricted in some way.”
Robert said “This speculation proved to be incorrect, at least for the time being. However, the nil rate band, i.e. the tax-free amount not subject to inheritance tax, is fixed at £325,000. Any value in excess of this amount attracts a high 40% tax rate. As such, the UK’s inheritance tax regime is not set up to encourage inward investment, in fact it actively discourages this.”
Another partner at the firm, John Bull, said: “contrast the UK tax regime with the US tax system for example and the difference is stark. Although US Federal gift & estate tax has been a political hot potato for well over 20 years, effective 1 January 2018, President Trump dramatically increased the US Federal gift & estate tax exemption from $5.49m to $11.18m.”
He added” “in today’s terms the exemption stands at $11.58m per person, or just over $23m for a married US couple, which takes the vast majority of US families out of US Gift & Estate tax.
“However, the winds of political change could soon reduce this significant variance – if the Democrats, led by Joe Biden, prevail in November it is well publicised that a reduction in the US exemption will be high on the tax policy agenda.”
Robert said: “the US estate tax regime is clearly very generous. The UK government needs to address this imbalance and they should start by increasing the tax-free amount and commit to keeping the business relief so that individuals can plan with certainty. A longer term view is needed, rather than short term reactionary measures which are ill thought out.”