These factors have led to a significant growth in property prices since the mid-1990s – as the graph provided by Nationwide illustrates.
The family home is often the primary asset in an estate and this appreciation in value has left many exposed to Inheritance Tax (IHT) unexpectedly - the Nil Rate Band (NRB) has remained unchanged at £325,000 per person since 2009 (the NRB is the threshold above which IHT is payable). Furthermore, IHT is rumoured to be a target of the Autumn Statement. Add in personal effects, savings and any investments and the threshold can quickly be breached.
Despite the phasing in of the Residence Nil Rate Band (RNRB), now £175,000 per qualifying person, the increased value of estates has led to a marked increase in the amount of IHT paid by the UK population and this trend is anticipated to continue according to The Office of Budget Responsibility; especially if the NRB freeze is extended.
IHT can be an emotive topic: it is a taxation on death, it is a “double taxation” (a taxation on assets that were accumulated during life, after tax was paid), it’s referred to as a “voluntary tax” due to the options available and the liability can put great strain on beneficiaries who are already coming to terms with the death of a loved one.
Gifting, utilising certain Trusts, insurances and of course spending the money (you could consider all purchases at a 40% discount), can assist in lowering the contingent IHT liability and reducing the stress this can generate at a most delicate time.
An area less well known, and available to those with some liquidity, is the tax reliefs available for investment into Business Relief (BR) qualifying assets. This piece of legislation has been in place for over 40 years and enables an investor to retain control of their monies, seek investment returns and once held for 2 years, gain exemption from IHT on death – BR assets effectively move outside of the estate for standard IHT purposes, enabling other assets to utilise the tax free £325,000pp allowance.
The investment returns element is a crucial part and there are a range of different options available spanning a wide range of risk tolerances and return profiles. These investments can help diversify a portfolio and offer value on a purely investment basis before tax advantages are considered and ‘boost’ potential returns.
In addition, being able to retain control of your funds can be of real importance to people, you simply never know what the future holds. The quick qualification for IHT relief – 2 years rather than the 7 years for gifting – can create greater certainty and provide peace of mind.
We strongly believe in the benefits of developing long-lasting relationships with our clients.
We aim to be approachable, easily contactable and offer a broad, inter-discipline, assessment of client needs. We are happy to meet via telephone or virtual meeting, but still prioritise face-to-face meetings where possible.
We work closely across our departments to ensure that specialist knowledge and experience is accessed; when queries arise, there will always be someone available who understands and can deal with your concerns.
We are also keen to work alongside other key stakeholders and individuals; land agents, accountants, your existing solicitor or financial adviser, and of course, your family.
As a firm we are keen to promote and involve ourselves in the community, and to support local charities and initiatives, such as Jeremiah’s Journey, St. Lukes, the Plymouth Argyle Community Trust (Project 35), Emotional Logic and the Ivybridge Brewery.
The South West is a beautiful places to live and we are proud to be based here, we’re therefore keen to help where we can.
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