In this week’s Enews, there is news on the Chartered Institute of Taxation (CIOT) calling for the implementation of an IHT transitional rule for gifting assets. There is also news on the UK potentially falling behind in the race to achieve net zero and the Chancellor’s pre-Autumn Budget speech to update you on.
CIOT calls for implementation of IHT transitional gifting rule
The Chartered Institute of Taxation (CIOT) has urged the government to implement a transitional rule to allow older farmers and other business owners to gift assets to the younger generation free of Inheritance Tax (IHT) before changes take effect in April 2026.
Current rules incentivise farmers to keep their farms until their deaths, the CIOT stated in a submission to an inquiry by the House of Lords. Its proposed changes would reverse these incentives and promote lifetime giving.
However, for older farmers where there is a risk that they could die within seven years of making a lifetime gift (but after April 2026), the gift would be ineffective for IHT purposes. According to the CIOT, a ‘cliff edge’ is thus created on 6 April 2026.
It has suggested that the risk could be mitigated by amending legislation so that any gifts of relievable assets made between 30 October 2024 and 5 April 2026 would continue to benefit from the old rules even if the farmer died within seven years.
‘We are concerned that bringing in changes to agricultural and business reliefs with a cliff-edge date of 6 April 2026 is leading to great anxiety among older clients as they are unlikely to survive seven years and therefore are unlikely to see making gifts as a solution,’said John Barnett, Vice President of the CIOT.
‘We think that there is a straightforward and relatively low-cost transitional rule that could address this concern: allowing gifts made between now and April to continue to qualify for the 100% relief currently available. While this is not a complete solution to the problem – there may be some for whom making a gift is impractical or impossible if they have lost capacity – it should significantly reduce the risk as it gives a viable and straightforward alternative.’
Internet link: CIOT website
UK could fall behind in net zero race, BCC warns
The British Chambers of Commerce (BCC) has warned that the UK could fall behind in the race to achieve net zero.
Research carried out by global management consulting firm McKinsey and Company showed that the transition to net zero could potentially be worth more than £1 trillion to UK business by 2030.
A survey of more than 2,000 firms revealed that 43% believe costs are ‘significant barriers’ in transitioning to net zero. 34% stated a lack of finance prevented them from transitioning.
The BCC has called on the government to address gaps in funding; combat skills shortages; and ensure stability in regard to policies.
‘The UK has the businesses, ideas and talent to lead the world in low-carbon innovation,’ said Shevaun Haviland, Director General of the BCC.
‘But without urgent action, we risk falling behind in the global race for green growth.
‘We need ministers to work with business to tear down the barriers on finance, skills and policy that are holding too many firms back.’
Internet link: BCC website
Chancellor refuses to rule out raising taxes in Autumn Budget
In a pre-Autumn Budget speech from Downing Street, Chancellor Rachel Reeves refused to rule out raising taxes in the upcoming Autumn Budget on 26 November.
Ms Reeves used the speech to outline the challenges facing the government, and highlighted her priorities in regard to Autumn Budget measures.
Beginning her speech, Ms Reeves said she will ‘make the choices necessary to deliver strong foundations for the economy’ and stated that the government’s priorities are protecting the NHS; reducing national debt; and improving the cost of living.
The Chancellor said: ‘I want people to understand the circumstances we are facing, the principles guiding my choices and why I believe they will be the right choices for our country.
‘The choices I make in the Budget this month will be focused on getting inflation falling and creating the conditions for interest rate cuts to support economic growth and improve the cost of living.’
No. 10 refused to re-commit to the manifesto pledges made by Labour before the election, which has led to speculation in regard to potential tax rises that could be unveiled in the Budget. Previously the Labour Party had promised not to increase Income Tax, National Insurance (NI) or VAT.
Internet link: GOV.UK
