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Estate Planning Advice

Author

Andy Wood

Andy is a practical, creative tax adviser who assists a variety of clients in achieving their personal and commercial objectives in the most tax efficient manner.

Many will have spent a lifetime building their wealth – perhaps building a business over many years, building a large property portfolio etc.

However, that wealth may be easily lost whether it comes under attack from commercial creditors, family breakdown or the tax man.

Indeed at 40%, Inheritance Tax can be a substantial bite out of one’s wealth.

Many may be fairly sanguine about this, and take the view that their descendants have a better start in life regardless. However, many will also take the contrary view – and IHT is a particularly disliked tax.

Even where tax is not the main objection, the thought of having to sell an asset or assets with sentimental reasons to raise the tax might be totally unpalatable.

There was, and perhaps remains, a rather trite saying that IHT is a ‘voluntary tax’. That is not true but perhaps is shorthand for the fact that the tax system has been primarily focussed on taxing income – whether from employment, self-employment or investment income.

However, over recent years there has been a clear shift in looking to tax wealth and capital. This has included sharp rises in property tax – whether that be in respect of SDLT, annual taxes on enveloped dwellings, changes to interest relief for B2L investors and a major change in the IHT position for non-doms around residential property.

It is our view that the Government and HMRC will be seeking to tighten up the IHT rules and perhaps restricting the availability of, or refocussing, certain reliefs. For instance, Business Property Relief is not only available on an entrepreneurs’ trading business but also on various investment portfolios marketed at retail investors.

That said, there are still many opportunities to protect one’s assets from IHT. However, like any form of tax planning, one should ensure that the personal and commercial objectives are attended to first and then the tax planning fits in with that.

However, we have been involved in a number of different projects recently where we have restructured activities in a way that secures some form of IHT relief. A particular area of interest, and expertise, is for property investors.

This is an interesting area because property investment assets generally speaking will be exposed to the full ravages of IHT and, probably, CGT.

There are many different areas of we can assist in and advice will very much depend on the circumstances and precisely what the client is trying to achieve. There is little point in saving 40% IHT by wrapping funds up in a structure where the funds cannot be used in a practical fashion by the family (assuming that is an objective!)

As such, if you need any assistance in this area then please do not hesitate to get in touch.

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