Inheritance Tax (IHT) is primarily a tax payable on death. It is then that the major liability normally arises and there is often a problem for those you leave behind to find the cash to pay the tax liability.

The Chancellor of the Exchequer used his 2006 Budget speech to confirm that only 6% of estates currently pay death duty. However, the number effected could jump 32% by 2020 (Source: Halifax), as rising property prices push more people over the threshold at which the tax becomes payable, currently £325,000 per person from 6th April 2009. Recent changes to allow married couples to pass each others unused allowance on to the survivor on 1st death have helped, but for some, IHT will still be an issue.

The threshold will rise by more than price inflation over the next few years, but it has failed to keep pace with the robust house price growth over the past decade, with this trend looking set to continue. Families are therefore increasingly turning to trusts to limit the tax burden when they eventually pass on their wealth

At J M Glendinning Life + Pensions Ltd, we have considerable experience in the advice and implementation of IHT mitigation scheme for our clients. Some of this can be complicated, but there are also some basic inexpensive steps, which can create immediate benefits in the majority of cases.

Some are only applicable to married couples, but there are also steps that single people should take. The vital feature is that in mitigating the tax liability, you should not risk your lifestyle by reducing income, access to your capital or giving away your property, which could result in you having to pay a rent.

In addition to these basic steps, we design schemes for larger estates, and although some can be expensive to implement, the benefits can often far exceed the cost.

Because IHT planning can be so effective, beneficiaries may be able to make significant tax savings so they may be willing to help with the costs of life insurance or the legal and professional fees involved. (Read more...)