“Encouraging savings is why I made my promise that only millionaires would pay inheritance tax.”
Conference watchers will recognise these words spoken by George Osbourne in his speech at the recent Conservative Conference. The speech from Gordon Brown the week before at the Labour Conference contained the equally vague statement as to the intentions of the Labour party – “the Conservatives want to cut inheritance tax for the 3,000 wealthiest Estates [in Britain], so that means even less money for frontline services.”
As a consequence, there is still no clear guidance for estate planners and practitioners on what is going to happen to the complex fiscal structure of Trusts and Estates following the 2010 election.
Overall tax revenues continue to slump and as each forcast is released from the HMRC, the projected Inheritance tax drops.
Inheritance Tax Projections: Source HMRC Annual Receipts
November 2008 estimate ~ £3.2 billion
December 2008 estimate ~ £3.1 billion
April 2009 Estimate ~ £2.9 billion
August 2009 Actual ~ £2.8 billion
The UK economy has shrunk for five consecutive quarters, meaning the country has now been in recession for more than a year. Economists were expecting the UK economy to return to growth in the third quarter of the year, between July and September. However, leading financial institutions suggest the recovery will be slow, with unemployment remaining stubbornly high for some time to come.
An election must be held before June 3rd of next year.
No one knows if property has really recovered, if the collapse in share prices will be repeated or if the banks have really recovered.
With this backdrop, it is interesting to assess some of the changes in the market.