Page 12 - Budget Newsletter - March 2023

• The normal expenditure exemption. Any gift that you make is exempt from IHT if:

o it forms part of your normal expenditure; and
o taking one year with another it is made out of income; and
o it leaves you with sufficient income to maintain your usual standard of living.

Future changes?

In July 2019, the OTS made a range of proposals to simplify some of the complexities of IHT. After a
prolonged period of procrastination, Rishi Sunak (the then Chancellor) decided to ignore the bulk
of the ideas, making only a useful, but technical, change to estate reporting requirements. The
current Government’s main IHT strategy has been simply to freeze the various monetary limits,
thereby allowing inflation to increase revenue in the stealthy manner beloved of Chancellors over
the years.

Planning Point

While the current IHT regime is gradually tightening thanks to what economist call ‘fiscal drag’,
it does remain surprisingly generous in its treatment of some lifetime gifts. This could change
after the next election, meaning that, if you are considering, for example, help towards a deposit
on a child’s first house, it could be wise not to delay for too long.

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