Huge inheritance tax rule changes planned in the Budget as thousands more families could be hit with bills
INHERITANCE tax and stamp duty are both set for a hike at this month’s “painful” Budget.
In a bid to fill a £40bn black hole in the public purse, Rachel Reeves is also eyeing up a raid on vape duties.
Inheritance tax is currently charged at 40 per cent on the homes and cash of somebody who has died, if their belongings are worth £325,000 or more.
Currently only 4% of UK adults pay what has been dubbed the “death tax”.
But the amount they are charged could grow as Ms Reeves considers raising the inheritance tax headline rate – though it isn’t yet known by how much.
Meanwhile, house buyers will be charged up to £2,500 more in stamp duty from next year as the Chancellor ends a £2bn discount introduced by the Tories.
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Ms Reeves will move the nil rate threshold back down to £125,000 from £250,00.
For first time buyers the the threshold for paying stamp duty will move from £450,000 to £300,000.
The move is set to save the Treasury £1.8bn.
In a major blow for e-smokers, Treasury mandarins are also looking to vapes as another possible product for a tax raid.
The Chancellor is also expected to slash £3bn from the welfare bill in the Budget – with £1.3bn of that coming from disability benefits.
The changes, first introduced by the Tories, will tighten access to sickness benefits through tough new rules under the Work Capability Assessment.
A spokesman for the Treasury said: “We do not comment on speculation around tax changes outside of fiscal events.”
The Chancellor submitted her final Budget plans to Britain’s economic watchdog, the Office for Budget Responsibility, earlier this week.
She also wants to build up a buffer to help keep the country better protected against economic shocks.
One close ally of the Chancellor said: “If we are having to raise taxes, we want to put the money into the people’s priorities.
“The NHS is the number one priority.”
Predictions for the Autumn Statement
The Sun’s Head of Consumer Tara Evans reveals the top predictions for the Autumn Statement:
Winter Fuel Payments
Chancellor Rachel Reeves has already announced that Winter Fuel Payments will be limited to those receiving pension credit and certain benefits. The benefit is worth up to £300 per year and currently is available to everyone over state pension age and those on certain benefits.
No rises to some taxes
Keir Starmer promised there would be no rises to National Insurance, Income Tax, Corporation Tax or VAT as part of Labour’s manifesto in the election race.
Inheritance Tax
It has been predicted that the Chancellor Racheal Reeves will make changes to inheritance tax rates or thresholds. One suggestion is the potential shortening of the gift period before death for tax exemptions.
Pensions
Pensions featured very high up in the King’s Speech, was this a hint at how high on the agenda it will feature in the budget? Experts say there are a number of options, including reintroducing the lifetime allowance cap. Ms Reeves has previously campaigned to reduce the tax relief that higher earners get on their pensions and to introduce a flat rate of 33% instead. Another possible option is changing the rules around pensions and inheritance tax.
Capital Gains Tax (CGT)
There is speculation that the £3,000 tax-free allowance could be scrapped or there may be an extension of CGT to other assets.
Business Rates
There are rumours of reforms to support small businesses, possibly basing rates on land value.
Fuel Duty
Possible rise in fuel duty, reversing the freeze since 2011 and impacting household costs. The Sun has backed drivers as part of its Keep It Down campaign since the start of 2011.