Existing clients can use these links to log in to the Infinity dashboard. Not a client? Why not get in touch to find out about our services.
Inheritance tax generates big bucks for the UK Treasury. According to the ONS, the total pocketed in the tax year from April 2013 to April 2014 was a whopping £3.4bn, yes that’s billion! In spite of this, in the run-up to the UK election in 7th May 2015 the Tories are hoping to woo retirees and property owners with the promise of a cut in inheritance tax (IHT). They have set their stall out stating that inheritance tax should be levied purely on the rich, although at present their election pledge on this issue is light on details. Some have speculated that the current threshold of £325,000 could rise to £2mn.
Under the current regulations increasing numbers of middle-class individuals are liable to pay tax at a rate of 40% on any assets over the threshold. One reason for this is rising property prices. In some parts of the country the mere fact of owning your own home will bring you over that threshold – according to figures from Right Move the average price of a property in the south east is £326,163, with a London average of £523,953. While house prices have been rising over the last five years, the IHT threshold has stayed the same.
It seems reasonable that individuals should be able to pass the family homes they have worked so hard to own on to their loved ones after their death and indeed that is the line that David Cameron is spinning as he hopes to win middle-class votes. The difficulty for the Conservatives is how they would plug the hole this would leave in the finances while still delivering on their election pledges of eradicating the deficit by 2018, cutting income tax and raising the higher tax rate.
There is a sense of déjà vu here. The Tories made the same promise to cut IHT prior to the 2010 election but were thwarted by their coalition partners, the Lib Dems. Given that this year’s election result is far from clear it would be folly to pin your hopes on the IHT threshold rising. A far better plan is to look at ways of reducing your own personal liability and this is easily achievable with specialist advice.
Options include regular gifting up to specified annual limits to pass some of your legacy to your loved ones during your lifetime and setting up a trust to protect assets and reduce the tax burden for your beneficiaries. In addition, certain stock and property investments could be exonerated from IHT.
Everyone’s circumstances are different which is why seeking the help of a professional on this issue is essential, in particular for expats who may have assets in several different countries. It is folly to leave the future financial security of your family in the lap of the gods. Take action now and contact one of our advisers for further information.