Inheritance Tax Planning

Most of Middle England is exasperated. Throughout their working lifetimes, people save heavily taxed earnings to build up capital and assets to pass on to their children. On their death, in steps the Chancellor to confiscate a swingeing 40% of the value of the estate beyond £250,000. Many houses these days are worth considerably more than that.

Middle England are the only people paying this iniquitous tax. The rich can plan to avoid most of it and the poor do not run into the problem. Most people know that the best way to avoid inheritance tax is to give the money away, using Potentially Exempt Transfers (PETs) whereby the gifted money clears completely out of the estate for inheritance tax purposes in seven years provided the donor remains alive. However, they are afraid to pass money to the children because it has to be given away absolutely. Reservation of benefit from the gifted money by the donor nullifies the tax planning. In old-age, parents might need to cope with medical or residential care expenses. The result is that they do not give money away and the estate is defenceless against attack by the Chancellor.

But planning is worthwhile. Systematic use of annual exemptions helps a little to peg the value of estates with assets that year on year continue to grow, thus exacerbating the inheritance tax problem. The most powerful means of protection, however, is to use properly structured family trusts that can reduce significantly the amount of inheritance tax levied on the estate and still leave the parents with access to the capital if required, without compromising the tax-planning. These are inexpensive and easy to set up.

Let us help you pay less to the taxman and keep more of your estate for the people for whom it was intended.

Inheritance Tax Calculator

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