Archive for the ‘Inheritance Tax’ Category
Thursday, August 23rd, 2007
Conservative party plans to abolish inheritance tax (IHT) in favour of capital gains tax (CGT) would not mean the end of gifting or creating trusts, one industry body has stated.
Those looking to organise their estate may be interested to read news from the life assurance firm, which states that while inheritance tax has been in place an industry has sprung up around the creation of vehicles which mitigate its impact upon a deceased person’s wealth.
Julie Hutchison, estate planning specialist at Standard Life, asserts: "Considering the impact of [the proposals] on lifetime estate planning, it certainly would not necessarily mean the end of trusts or lifetime gifting.
"Indeed, it would become imperative to consider lifetime gifting earlier since the current seven-year clock for IHT could effectively become a ten-year clock."
Ms Hutchison concluded by saying that any simplification of the current IHT model was to be welcomed, with an integrated approach to taxation lifting some of the burden that affects an increasing number of households.
Recently, independent financial adviser Calculis announced that IHT was beginning to impact even on "modest homes", the occupiers of which were unaware of the levy likely to be required in the event of a death.
Posted in Inheritance Tax | No Comments »
Friday, August 17th, 2007
Rising property prices are the major reason that inheritance tax (IHT) is impacting upon consumers who would previously be exempt, according to one industry commentator.
Calculis, an independent financial adviser (IFA) specialising in personal planning tax services, states that even those with "modest" homes may find that their estates breach the £300,000 threshold above which IHT is levied at 40 per cent.
Alex Pegley, director of the firm, remarks: "The ones that I think will be increasingly caught are the ones with more modest homes, like three-bedroomed semis, because people with bigger homes come and see their IFA and he does some planning for them."
In contrast, those with more modest homes do not believe they will be affected, he suggested.
Mr Pegley added that civil partners and married couples can take steps to mitigate the impact of IHT if they seek appropriate financial advice.
Recent figures from the Halifax house price index suggest that the average house price in the UK is £196,525, while the average annual price increase stands at 10.7 per cent. When other assets are taken into account, many commentators have suggested that increasing numbers may find their estates overrunning the £300,000 threshold.
Posted in Inheritance Tax | No Comments »
Thursday, August 16th, 2007
Increasing personal wealth and price inflation in the UK property market has resulted in more estates being liable for inheritance tax (IHT), according to Defaqto.
Figures published by The Office of National Statistics show that 4.8 million consumers in the UK own homes worth over £300,000 – with 40 per cent tax payable on assets in excess of this amount – while a further 4.5 million will be required to pay IHT when their personal funds are taken into account.
The 2006 budget saw changes in taxation of monetary transfers into certain types of trust funds, making previously tax-free gifts potentially liable to tax. Defaqto recommends seeking financial advice in the matter.
Kate Marsden, marketing director at Defaqto, commented: "As UK house prices continue to outstrip rises in the IHT threshold, more and more households are falling into the IHT net".
"Advance tax planning is essential if individuals bequeathing assets to their heirs want to reduce the potential IHT bill their beneficiaries will face. Writing a will is a good place to start," she added.
Defaqto is an independent financial product and service research company.
Posted in Inheritance Tax | No Comments »
Wednesday, August 15th, 2007
A scheme to raise awareness about how all consumers can be affected by Inheritance Tax (IHT) has been launched by Yorkshire Building Society.
The Keep it in the Family campaign aims to highlight the numerous lawful means by which individuals can reduce their IHT bill, or avoid it altogether.
IHT is paid at 40 per cent on everything left in a deceased individual’s estate valued over the £300,000 threshold.
Yorkshire Building Society advises that those who believe their family home to be below the threshold should be aware that other assets owned abroad will also be included in the value of an estate.
Spokesperson for Yorkshire Building Society Tanya Jackson said: "Without planning for IHT liability many people are unsuspectingly treating the taxman as an extra child. When the money is divided between loved ones and offspring the taxman will be there to get his share."
Ms Jackson added that consumers should not view IHT as something that only affects wealthier individuals.
In his last budget as chancellor, Gordon Brown announced that the IHT threshold will rise to £350,000 by 2010.
Posted in Inheritance Tax | No Comments »
Thursday, August 2nd, 2007
Independent financial advisers offering advice to those looking to organise their wills or estates are likely to welcome a new pack from insurer and finance provider Standard Life.
The firm has announced the launch of a new estate planning pack intended for both advisers and their clients, which details a variety of opportunities for limiting the impact of inheritance tax (IHT).
Focussing on the company’s own products, the pack also provides commentary on subjects such as wills and IHT issues surrounding family homes.
Julie Hutchison, estate planning specialist with Standard Life Assurance, remarked: "Advisers work closely with clients to help them maximise their wealth and plan for their financial future but this will mean little to the next generation if estate planning is not considered, side by side, with other areas of financial advice."
Last month, Zurich unveiled its own IHT planning tool which it stated would help to mitigate the effects of a tax impacting on the finances of an increasing number of consumers.
Posted in Inheritance Tax | No Comments »
Friday, July 27th, 2007
As increasing numbers of people across the country fall foul of the inheritance tax threshold, one finance provider is urging them to evaluate what will happen to their estate.
Building society Bradford and Bingley has noted that rising house prices mean that more and more people will find that their estate exceeds the £300,000 bench mark above which IHT applies.
It also states that the Treasury estimates it will reap a record £3.6 billion as a result of the tax this year, compared with £2.9 billion in 2004-05.
The firm suggests that a number of moves, such as setting up gifts to friends or family or setting up trusts, can help to mitigate the impact of the tax.
Andrew Stead, head of wealth at Bradford & Bingley, commented: "Planning what will happen to your estate sounds like a depressing thought, but what is even more depressing is the amount of tax your estate could be subject to if you don’t start planning now."
Recently, Standard Life welcomed a move by HM Revenue and Customs to simplify the IHT reporting process, saying that it represented a "positive step" for taxpayers.
Posted in Inheritance Tax | No Comments »
Tuesday, July 17th, 2007
The correct assistance and planning can be instrumental in avoiding the worst of inheritance tax (IHT), one financial advice service has stated.
According to unbiased.co.uk, many people are failing to seek out financial advice on IHT and are thereby allowing HM Revenue and Customs to levy a higher tax charge than is necessary.
David Elms, chief executive of the firm, told the Manchester Evening News: "The IHT liability is paid by beneficiaries, often at a time when they are grieving over a lost friend or family member.
"Without advance tax planning, increasing amounts of IHT will fall into the hands of the taxman."
One of the essential services that an advisor can perform is ensuring that a will is written correctly in order to prevent unnecessary levels of taxation.
In April this year, Scottish Widows released research suggesting that four in ten homeowners (37 per cent) still have an estate liable for IHT after their death, despite the threshold being increased from £285,000 to £300,000.
Posted in Inheritance Tax | No Comments »
Monday, July 16th, 2007
The initiation of a government consultation into the workings of inheritance tax (IHT) reporting requirements has been welcomed by one industry body.
Assurance firm Standard Life has asserted that recent changes to the treatment of gifts and trusts, as detailed in the 2006 Budget, have meant that many consumers have been forced to file a variety of forms reporting gifts even when IHT should not be levied.
New levels of compliance established last year meant that some trusts, previously potentially exempt, became chargeable, moneymarketing.co.uk reports.
However, new regulation under consultation would mean that forms would not have to be filed for transfers under £210,000, provided no other chargeable transfers had been implemented within the last seven years.
Julie Hutchison, Standard Life Assurance estate planning specialist, remarked: "I welcome this open approach to developing the new regulations.
"The proposed retrospective nature of these rules is a positive step since taxpayers who have made gifts to trusts from April 6th 2007 onwards will be able to take advantage of the new rules when they are finalised."
Last month Standard Life urged widows to seek advice in reviewing their legal and financial affairs, ensuring all such matters are clearly understood in one of the "difficult and confusing times a woman can face".
Posted in Inheritance Tax | No Comments »
Wednesday, July 11th, 2007
Inheritance tax (IHT) is a problem facing an increasing number of people, but popular methods of avoiding the tax burden are not always viable in every case, one commentator has stated.
Clerical Medical has expanded on its observation that consumers should seek advice about IHT, saying that making gifts is not always possible or favourable.
Nick Williams, chartered tax adviser at the firm, states: "Many people will be faced with the classic inheritance tax dilemma: they have an estate worth more than the nil rate band but can’t make a gift of capital as they rely on it and the income it generates."
He suggested that a number of options remain open to such consumers to mitigate liability, such as the creation of a loan trust, a discounted gift and income trust, or establishing a life insurance policy.
Inheritance tax is currently levied as a rate of 40 per cent of all estates exceeding an exempt band of £300,000, although this is set to be raised to £350,000 by 2010.
Posted in Inheritance Tax | No Comments »
Tuesday, July 10th, 2007
Fresh calls have been made this week to educate the public about the financial risks associated with inheritance tax.
Investment adviser firm Edward Jones has warned that, with house prices continuing to rise, more and more people may unwittingly find their estate breaching the £300,000 threshold for the tax.
Brian Potter, a financial adviser and stockbroker at the firm, remarks: "It’s very easy for an estate to be worth a lot more than the current £300,000 inheritance tax threshold, with tax charged at 40 per cent on everything above this limit."
He added that making a will could help to resolve problems associated with passing on an estate, while the public should investigate their options to minimise the financial impact of inheritance tax should it be applicable.
Last week, Clerical Medical highlighted a number of actions which can alter the amount paid to the taxman, such as] the inclusion of a deed of variation and maximising exemptions and pension contributions.
Posted in Inheritance Tax | No Comments »
