Blog | Posts Tagged 'Inheritance Tax'

An investment – lump sum or regular savings – into an offshore bond written under a Discretionary Trust could be a particularly attractive way of pre-funding these costs.

An Individual Savings Account (ISA) is a “wrapper” for cash and/or investments which confers some valuable tax benefits to UK resident savers and investors.

Whilst Enid’s overriding concern is to maintain her own financial independence, come what may, she continues to be concerned about the impact Inheritance Tax (IHT) will have on her two sons when they eventually inherit.

Former Chancellor of the Exchequer, Roy Jenkins, once said, “Inheritance Tax is a voluntary levy paid by those who distrust their heirs more than they dislike the Inland Revenue”! Whilst the rules have been tightened-up somewhat since he said this, there are certainly many things that can legitimately be done to reduce the burden of Inheritance Tax.

One of the most comprehensive reliefs from Inheritance Tax (IHT) is Business Property Relief (BPR). This has been part of the IHT landscape since the tax was first introduced in 1984 and, for many years, has provided 100% (originally 50%) relief for qualifying business assets.

Are inheritance gifts a good way to avoid Inheritance Tax?

In a word, yes! However, are you absolutely certain you can afford to make the gift in the first place? Have you enough income and other financial resources to maintain your standard of living throughout your retirement, come what may, even for future long-term care, for example? If so, gifts are a great way to reduce a future Inheritance Tax liability.

Inheritance Tax is usually paid on an estate (all assets, less any liabilities) when somebody dies. It’s sometimes payable on trusts or gifts made during someone’s lifetime (but only to companies, not individuals).

Written under a simple family trust, the policy proceeds then cost-effectively compensates the beneficiaries for some or all of the IHT on death.

Are you passing an Inheritance Tax problem down the generations? Watch this interesting animation.

If it can be demonstrated that a pattern of gifting had been established and that the amounts gifted were demonstrably affordable out of normal income, those gifts are outside your estate immediately