Record IHT receipts means there’s never been a better time to plan your affairs
HMRC’s receipts from Inheritance Tax increased by 8% on the previous year, in the financial year to April 2018, to £5.2 billion. This is despite the introduction of the new Residence Nil Rate band which is available to those who leave a residence to direct descendants. This is likely to be because more middle class and working families are now caught through increases in house prices.
Whilst, aggressive tax planning is not appropriate, there is no reason why prudent people should not plan their affairs and take advantage of the numerous and often under-used exemptions and reliefs set out by law. There are also many, perfectly legitimate and well accepted, investment products which also have Inheritance Tax advantages.
One can consider making gifts, providing this does not leave your own position vulnerable. Gifting can often cause concern because you are worried the recipients may not handle the funds as you would like or could disappear in their divorce. A solution in the right circumstances is to gift to a trust. These need not be as complicated as many people fear and are fairly easily managed with the right guidance.
It is also vital to make sure your Will is properly set up, to maximise the benefit of available exemptions and reliefs. It is very easy to lose the full Residence Nil Rate Band, simply by including some gifts to charity or other people who are not your direct descendants, or leaving your estate to children or grandchildren at a specified age, for example.
There is currently an Inheritance Tax consultation which means we might see changes to the tax regime in this year’s Budget. So, I would say the key is always to plan well ahead and have your affairs reviewed regularly!
If your likely Inheritance Tax liability concerns you and you are not familiar with the steps you can quite rightly take, it is crucial to take advice from a suitably qualified professional. Not all accountants or solicitors have the depth of knowledge to provide holistic planning.
Speak to our expert Carla Brown on 01202 057716 or email on firstname.lastname@example.org for more information. Alternatively, read more on our Wills, Trusts and Probate team and services.