FTAdviser.com

Advertising

A pledge by the Conservative Party to increase inheritance tax to £1m will make estate planning difficult for advisers as they deal with political uncertainty, Anthony Coyte from AWD Chase de Vere has claimed

The Tories have pledged to raise the IHT nil-rate band to £1m if it gets into power, and have said that any unused nil-rate band can be transferred to the surviving spouse in the case of couples, taking the total rate to £2m.

However, Mr Coyte, head of investment steering group for AWD Chase de Vere, said the move would make IHT planning difficult for advisers as it increases uncertainty among future rules and regulation in the event of a Conservative victory in 2010.

He said: "We are telling our clients that you have to consider that things might change in the future and it depends on their attitude. It is an issue that many advisers may not think about. If you are really wealthy and you have more than £2m in assets you should continue doing what you are doing.

"If you have between £620,000 and £2m should you be tying up your assets in a way that could be inefficient for inheritance tax on the basis you might survive until there is a Conservative government. There are lots of ifs. You have to survive until the Conservatives get into power and the Tory's have to do what they said they are going to do."

Amanda Davidson, IFA at London-based Baigrie Davies, said even though the Tory party said that it is going to implement the policy, it has not said when it is going to do it.

She said: "As an adviser you have to advise in the context of today, which is not to say you ignore what might happen. It is a bit of speculation to say that the Conservatives will get in.

If you have a client that strongly believes they are definitely going live until this comes in and they know it is going to come in their own hearts - they could wait.

"It is tricky. I have a new client who has an IHT bond, and she may not need it because of the affects of doubling up - these investments are being set up and may no longer be applicable."

A Conservative Party source said, depending on the outcome of the election there would be a status quo or a new system that was "more generous" than the current one.