Inheritance tax has become a significant source of revenue to HM Treasury over the past few years as more people are finding their estates liable to Inheritance Tax.
According to the Treasury’s own statistics, 40,000 families paid IHT in the year ending 5th April 2016 – a 160% increase since the tax year ending 5th April 2010. In 2010, £2.69bn was collected in IHT; this increased to £4.6bn in 2016 and then to £5bn in the year ending 5th April 2017, well ahead of forecasts made by the Office for Budget Responsibility.
This staggering increase is essentially down to the rise in the value of one asset class – property. Unfortunately, location is the chief determinant of property prices and in the UK the South-East is the most expensive area to live in.
According to the Registry Office, the average value of a detached house in the UK in January 2017 was £356,726. In the South-East, it’s far higher and usually the value of the house alone will often take up most couple’s combined Nil Rate Band and the new Residence Nil Rate Band.
It’s often said that inheritance tax is a voluntary tax – to minimise it all you have to do is give your wealth away and live for seven years. But simply giving wealth away is not always possible or desirable. There are too many problems and too many risks. And ultimately, most people need to live off the income or have access to the capital.
However, it is not all bad news. Proven strategies to reduce the effect of Inheritance Tax upon your estate are available and with a little planning in advance, it is possible to significantly improve the position for your loved ones without compromising your own financial security.
Our objective is to provide clients with an accurate assessment of the potential liability to Inheritance Tax upon their estate and to explain what steps they can take to reduce this liability in good time, with non-contentious planning that works.
We will explain the value of generational planning using Wills and Trusts and the benefit of Lasting Powers of Attorney. Based upon your needs and objectives, we will create a plan that will reduce the size of your taxable estate through tax-efficient gift allowances whilst identifying suitable assets that qualify for Business Relief, thereby providing exemption from Inheritance Tax. In essence a Personal Estate Strategy.
To talk further about Estate Planning, please contact us on 01494 683100 and we can discuss this with you in more detail