The Office for Tax Simplification (OTS) is due to make its recommendations, which may include a single, larger annual exemption to replace the four gift exemptions currently in place.
Individuals can give away £3,000-worth of gifts each tax year by using the annual exemption, which can be carried over for one year only.
Parents can also gift up to £5,000 towards their child’s wedding or civil ceremony, with grandparents being able to donate up to £2,500 and other individuals up to £1,000.
Most of these inheritance tax exemptions have remained unchanged since being introduced in 1986, sparking a call for change.
Sean McCann, financial planner at NFU Mutual, said:
“You can only remove complexity, so a sensible approach would be to replace all the existing exemptions with one single annual exemption of at least £10,000 which would increase in line with inflation.
“Rather than a radical overhaul of inheritance tax in the Budget, we’re likely to see some simple changes to help people pass on more of their wealth without the fear of triggering a tax charge.
“A healthier £10,000 annual exemption along with simpler, clearer set of rules would ease the burden on families.”
Hammond will deliver his Budget speech on Monday 29 October 2018.
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