Financial services technology provider, EV, has added a new inheritance tax (IHT) functionality to its end-to-end financial planning solution, EVPro.

EV said the move aims to give advisers a realistic IHT liability calculation for their clients.

The Chancellor, Rachel Reeves, confirmed in her Budget at the end of October that the freeze to the IHT threshold is being extended by a further two years, to 2030. This applies to the nil-rate band at £325,000 and residence nil-rate band at £175,000, which were previously frozen by the Conservatives until 2028.

Product director at EV, Ashley Staples, commented: “The IHT threshold has been frozen at £325,000 since 2021 and in that time, tax receipts have increased by 41% according to the latest HMRC figures, while over the last 10 years they have more than doubled, driven by rises in assets, particularly property prices.

“Announcements in the recent Budget, which extend the threshold freeze until 2030 and will also charge IHT on pension wealth, will increase the estimated tax take by a further 85% by 2029/30 with significantly more estates facing an IHT bill.”

EV has announced that the new functionality it is offering, available within EVPro’s Goal module, will now provide advisers with an IHT liability illustration based on the immediate death of an individual, or of both people in joint cases.

It will also allow advisers to factor in charitable donations, which are exempt from IHT and can also reduce the tax rate paid, from 40% to 36%, if 10% or more of the estate is donated. Historic gifts can also be added to consider the seven-year rule for potentially exempt transfers in the liability calculation.

Staples added: “Although the headline marginal rate for IHT is 40%, tax-free allowances, exemptions and reliefs reduced the average effective tax rate for taxpaying estates to 13% for the tax year 2021/22.

“With more people being pulled into paying IHT, EVPro’s new functionality gives advice professionals a comprehensive and realistic view of their client’s tax liability and the value of assets that can be passed on to beneficiaries, which is critical to effective estate planning and intergenerational wealth transfer.”

---