Autumn Statement: CGT and IHT allowances to rise by 1%
7th December 2012
by Holly Black
George Osborne revealed the rises in his Autumn Statement, saying that from 2015 there will be a 1% rise in the allowance for both CGT and IHT.
This will bring the annual CGT tax-free allowance to £11,100 and the IHT tax-free nil-rate band allowance to £329,000.
Though any increases are to be welcomed in this age of austerity, many experts are less than impressed with the lower than inflation increases.
Colin Glass, wealth protection lawyer and partner at DWFM Beckman, has branded the increases “derisory’, pointing out that particularly in London and the south east, where house prices are well above the national average, the IHT increase is not enough.
“If the government had increased the nil-rate band level with house price inflation over the corresponding period it should now be £522,000 and not the current £325,000,” comments Glass.
Sean McCann, personal finance specialist at NFU Mutual, says: “Raising the threshold for inheritance tax by 1% is largely an empty gesture; it doesn’t address the real problem of rising asset prices eroding family wealth. We’d like to see more being done to help people pass on assets to the next generation.”
Speaking about the CGT rate, which will stay at £10,600 for 2012/13 before rising to £11,000 the following year and finally £11,100 in 2015/16, Danny Cox, head of advice at Hargreaves Lansdown, says: “These modest increases help to offset inflation but underline the importance of using capital gains tax shelters such as stocks and shares ISAs.”
Read the article in Moneywise here.