Author: Charles de Lastic

Inheritance tax on the elderly

IHT on the elderly

Inheritance tax on the elderly

Data shows that inheritance tax payments to HMRC are due to rise sharply as it has revealed that the number of older people set to leave over £150,000 after death has doubled over the past 10 years.

Research shows that the number of wealthy people over the age of 80 has increased by 45% over the last 10 years. In addition, the number of people set to leave £150,000 to family has risen to 44% from 24% and the rise is dragging more families into inheritance tax. The rise in wealth and inheritance seems to be the result of home ownership and rising house prises. For the first time ever inheritance tax for ‘death duties’ totalled up to over £4 billion in 2016, which is causing a strain on middle class families.

This April, an addition of a ‘Residential Nil Rate Band’ is going to be put in place to reduce the amount of middle class families having to pay inheritance tax bills although the total amount collected is set to continually rise over the next few years.

Inheritance tax on the elderly gets introduced on assets over £325,000 but from this year the threshold will begin to rise up to an extra £175,000 in residential property wealth over the next 3 years.

It is believed that more people are leaving large inheritances and are being pushed over the inheritance tax threshold but actual number of middle class families having to pay the inheritance tax is set to be reduced by the higher threshold.  However, if the government isn’t happy with the effect over time then a peg would have to be put in place to increase its value relative to house prices rather than a consumer prices

We believe that unless the peg is put on the rising house prices rather than consumer price, then there will still be an increase in the number of middle class families paying inheritance tax. It would be fairer to peg the increases to house prices instead of CPI, as CPI is rising a lot slower, especially in the south of the country.

The number of over 80’s who are expecting to leave an inheritance has increased to 72% up from 60% in a decade which means that the number of individuals expecting to receive inheritance has increased across generations. The number of people born between 1930 and 1970 who are being left an inheritance has also doubled compared to 10 years ago.

In conclusion, the amount of younger people who are set to be left inheritance is all dependent upon who their parents are compared to previous generations. The elderly today have a lot more money to leave their family now due to homeownership and the increase in house prises.

At the same time, it will be difficult for young adults to get wealthy with no aid due to the fall in homeownership for that age category as well as the decline in defined pensions within the private sector and the lack of growth in their incomes.

As a result of both of these issues older people and their children should seek expert advice from an experienced financial planner in order to avoid inheritance tax.

Call us to see how we can help you avoid inheritance tax.

Read More

Reviewable Whole of Life Insurance Policies – Pros and cons

Reviewable Whole of Life Insurance Policies – Pros and cons

Many people take out reviewable whole of life insurance policies to cover the cost of Inheritance Tax on their estates on death.

(more…)

Read More

Reducing Inheritance Tax on Parental Residential Properties

Reducing Inheritance Tax on Parental Residential Properties

For many families, the bulk of their family wealth will be tied up in their residential property. From an Inheritance Tax perspective, this means that any amounts in excess of the Inheritance Tax threshold of £325,000 per person (£650,000 per couple) will be liable to Inheritance Tax at a rate of 40%. This, in turn, means that for each £100,000 of the estate over these thresholds, the children would only be able to benefit by £60,000. Therefore it can be seen that finding ways to reduce Inheritance Tax on parental residential properties can help the children significantly.

(more…)

Read More

Taxation Treatment for Gifted Properties

Taxation Treatment for Gifted Properties

If you are considering gifting a property it is important to understand exactly what the taxation implications of this decision would be. The relevant taxes to consider would be Stamp Duty, Capital Gains Tax, Inheritance Tax and Income Tax.

(more…)

Read More

Possession Trusts

Possession Trusts 

Trusts are legal structures set up to manage assets for people. They enable individuals to control and protect family assets and different trusts are useful for different sets of circumstances.

(more…)

Read More

Understanding Tax Avoidance

Understanding Tax Avoidance

There is no question that some transactions which result in the lowering of a person’s tax bill are perfectly legitimate whilst others are not.  However separating out those transactions which should be banned is not always straightforward.

(more…)

Read More

The Benefits of Estate Planning Awareness in Later Life

Estate Planning Awareness in Later Life Benefits You and Your Family

It is reasonable to suppose that most people would like their financial affairs to run smoothly when they become too old to manage such matters efficiently or easily themselves. It is also reasonable to suppose that most people want to pass as much of their wealth to their family as they can rather than to the tax man when they pass away. Both of these objectives can be achieved through timely estate and financial planning as you enter your later life years. The benefit such planning will bring you and your family is considerable.

(more…)

Read More

The EU referendum – Should we stay or should we go now?

The EU referendum – Should we stay or should we go now?

One of my favorite all time songs is the 1981 rock classic by the Clash “Should I stay or should I go”  was unusual in the backing tracks were sung in Spanish, which is a loose link to the title of this analysis on the EU .

(more…)

Read More

Why Ongoing Advice On Trusts Is Essential?

Why ongoing advice on trusts is essential?

Inheritance Tax planning today can be a little complicated and so advice on trusts is essential. The increased flexibility within schemes, the integration with pensions advice, the role of trustees and the need for regular investment reviews, are all important.

(more…)

Read More

Laws of Intestacy

Laws of Intestacy

The rules of intestacy that say how an estate is divided up if the owner dies without leaving a will change in October 2014.

(more…)

Read More
arrow_upward

Do your assets exceed £1.5 million?

Sign up to our FREE Video Guide about How to avoid Inheritance Tax specifically designed for you.