Inheritance Tax Planning

The scope for Inheritance Tax mitigation is becoming increasingly restricted. Over the past 20 years, successive Governments have introduced legislative provisions to reduce the effectiveness of schemes that were designed to mitigate the liability to inheritance tax, whilst allowing the investor some form of retained income or benefit. The Finance Act 2006 confirmed that this trend is set to continue under the present Government, who now raise over £2.75 billion a year from inheritance tax revenue.

Given the value of property today, many more people are being caught by a considerable liability to inheritance tax, a tax which has a standard rate of 40% on assets valued over £300,000 and one that many people would never have considered applicable to themselves.

The most effective form of inheritance tax planning on one’s estate is to give the capital away and survive seven years. Unfortunately, for most people this is not a realistic solution, as gifting capital to children will result in loss of income and capital.

The Government's pre-budget announcement to allow a surviving spouse to claim any unused nil rate band for a deceased spouse is a welcome move, ensuring that the first £600,000 of a joint estate is not subject to inheritance tax. Furthermore, there are a number of perfectly legitimate trust arrangements and specialist schemes that offer inheritance tax efficiency without losing control of investment capital and subsequent family income.

We have considerable experience of successful and effective inheritance tax planning. We have formal arrangements with additional specialists who are able to put suitable trust arrangements in place. Through a carefully planned inheritance tax mitigation strategy, we can ensure that accumulated family wealth is passed down to the next generations.