It has always been the role of the law to define what is meant by "fair". However, anyone scanning the news or social commentary will be unsurprised to hear that this topic is not without controversy.
There are many influences on the law; political intention, practical application, and societal context all jostle for position alongside fairness, but the balancing act of their sum outcome is another task again.
But how we define "fair", and at which point we consider the "real life" context of people’s lived experiences, is less clear-cut.
In my area of practice - trust and estate law - I was startled by new figures from HMRC which revealed that the UK Government’s decision to freeze the inheritance tax threshold at £325,000 until April 2028 could impact almost four times as many families than initially expected. This threshold has not changed since 2009 and has not kept pace with rising property values. Within HMRC’s own forecasts it has been suggested that some 49,400 estates - rather than previous estimates of around 13,400 - will now face being subject to inheritance tax in the seven years to 2028.
The Government’s decision - announced in November last year by then Chancellor Jeremy Hunt - was linked with the UK Government’s intent to reduce its budget deficit. However, the significant rise in families falling within the threshold is largely because of sustained high inflation rates raising the values of their estates.
But there is another significant factor at play here. HMRC has also published figures this summer which reveal that, as a result of higher death rates during the pandemic, there has been a corresponding increase in the number of estates facing inheritance tax payments - to the tune of a record £5.76bn in 2020-21, up £800m year-on-year. From a legal perspective, there is a question here around fairness: to individuals facing substantial inheritance tax bills and to the UK Government, too, trying to balance its books. Where does the best balance lie?
As legal professionals know, any change to laws within the UK, including Scotland, is a long-term undertaking and needs careful consideration, especially when there are higher-than-normal levels of economic and societal flux. Ultimately, it is the role of policymakers, and the voters who elect them, to decide. But wise legal counsel will be crucial.
In the meantime - and within existing rules - there are reliefs and exemptions available to mitigate exposure to inheritance tax, for those who wish to do so. But there is a more immediate challenge too; raising awareness of the potential inheritance tax burden. A recent survey has revealed that more than half of UK adults with an investment portfolio are not expecting their estate to be affected by inheritance tax, despite their desire to pass on their wealth to loved ones when they die. Given these findings, we are almost certain to witness a rise in demand for the services of experts in estate law.
Caroline Pringle is a director at Anderson Strathern and a specialist in trust and estate law
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here