In its response to the plans, ICAEW noted its dismay that only a small concession to uplift the £1 million allowance by inflation for 2030 was included in revised proposals. It added that legitimate concerns about the practical aspects of proposals had not been addressed.
Katherine Ford, Technical Manager, ICAEW said:
“We raised legitimate concerns about the practical aspects of these proposals, such as the lack of transferability between spouses, and how estates will fund the unanticipated inheritance tax (IHT) liabilities that will arise after 5 April 2026, in our response earlier this year.
“We are very disappointed that the government has failed to address these points and urge it to reconsider.”
ICAEW said the £1 million 100% allowance should be transferable between spouses, and that estates with farming and business assets must be able to pay the IHT due without having to sell off essential assets used in the business or farm. In some sectors with large asset bases, such as farming, even though those assets are of high value, the businesses do not generate large profits. If key assets need to be disposed of, businesses or farms will become unviable and unprofitable, jeopardising jobs, while any decline in farming may threaten the UK’s food security. There should also be measures that will facilitate the payment of IHT without estates incurring a double charge to income tax or capital gains tax when they need to extract funds from a business, the Institute said.
It added many businesses and farms are likely to be worth more than £1 million and this threshold should be reviewed to ensure the government meets its own estimates that 75% of estates will be no worse off.
The Institute said business owners will have planned their finances and ownership structures for decades on the basis that they would be entitled to full APR or BPR on their deaths. Those who are elderly, of limited life expectancy, or who lack legal capacity to change their wills or make lifetime gifts and cannot hope to survive seven years for gifts to be exempt from IHT, will be unduly penalised if a form of transitional relief is not introduced.
ENDS
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