Archive for the ‘Inheritance Tax’ Category
Tuesday, July 3rd, 2007
Careful planning can cut inheritance tax bills "dramatically", it has been advised.
By employing a variety of different techniques, the proportion of an estate lost through inheritance tax may be minimised, according to Clerical Medical.
The pensions and investments provider claims that exemptions and discretionary trusts may eliminate parts of the inheritance from the total on which tax must be paid.
"Good financial advice and planning can help customers reduce their inheritance liabilities by using a simple estate planning strategy," suggests chartered tax adviser Nick Williams.
"It’s relatively simple for people to take advantage of a range of tax exemptions and products to make sure that the maximum amount of wealth is passed to the next generation."
The firm suggests that using a discretionary trust could allow a portion of a legacy to be counted as a debt against the surviving partner’s estate, thus reducing the amount of inheritance tax to be paid when the partner died.
Financial services firm Edward Jones recently warned that inheritance tax is affecting an increasingly wide range of Britons due to rising house prices.
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Friday, June 29th, 2007
Inheritance tax affects an increasingly wide range of people, one financial services firm has claimed.
Edward Jones has commented that rising house prices are making the tax a growing possibility for a rising number of people.
The firm also pointed out that in the event of a member of the family dying without making a will, legal complications can ensue, adding to the potential costs.
"It’s also wrong to assume on death everything passes to one’s nearest and dearest. This is often simply not the case," said financial adviser and stockbroker Alan Cook.
"But interests can easily be safeguarded by making a will and taking advice. It is simple, inexpensive and can also help limit any inheritance tax liability," he added.
Mr Cook said that many consumers are unaware of how much their estate amounts to and claimed that it is "very easy for an estate to be worth a lot more than the current £300,000 inheritance tax threshold".
His comments came after Gordon Brown was criticised in parliament for his stance on inheritance, with Liberal Democrat Julia Goldsworthy claiming that the tax increasingly affects people who consider their income to be ‘middling’.
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Thursday, June 28th, 2007
The new prime minister, Gordon Brown, was criticised in parliament this week for his continued stance on inheritance tax.
On Tuesday, the leader of the labour party came under fire from Liberal Democrat Julia Goldsworthy, who stated that the "nature of inheritance tax is changing".
Formerly a charge affecting only the very wealthy, Ms Goldsworthy asserted that the tax now impacted on those considering themselves to have middle incomes.
However, chief secretary of the Treasury Stephen Timms asserted that the tax, affecting only six per cent of the population, reaped £3.5 billion each year to fund public services, the Guardian reports.
"It is wholly right and fair for such a contribution to come from the largest estates," he contended.
In his Budget speech earlier this year Mr Brown announced that the threshold for inheritance tax is set to rise.
Currently pegged at £300,000, the threshold is planned to be increase to £350,000 by 2010.
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Monday, June 11th, 2007
The number of over-50s choosing to invest their money in buy-to-let property is set to grow by a quarter (24 per cent) in the next year, according to one insurer.
Saga Home Insurance, a specialist providers serving the over-50s market, is urging consumers to take tax advice to ensure they are protecting their investment and making the most of their capital.
Andrew Goodsell, chief cxecutive of Saga Group, said: "It is no surprise that over-50s own the majority of second and rental properties in the UK -however, as more and more decide to follow this route, it is important that they understand the tax implications that rental income will have.
The firm reminds all of those buying a house for buy-to-let purposes that landlords have until June 22nd to declare any underpayments in tax in order to benefit from a 90 per cent reduction in the resultant penalty.
It states that it is "critical" that such investors take advice from a property solicitor or other private house specialist in order to safeguard their position.
Meanwhile, recent research from Saga revealed that 83 per cent of UK consumers remain unaware of new inheritance tax rules on trusts, while nearly half the population does not have a will.
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Thursday, May 17th, 2007
Aegon Scottish Equitable has published a warning that many pensions investors may have unwittingly created funds that have crept above the inheritance tax (IHT) threshold.
The firm has suggested that investors making full use of an Isa or Pep since 1987, when they were launched, could by now have accumulated £375,000.
It observes that this is significantly higher than the current £300,000 threshold, meaning that on their death investors’ next of kin could be faced with a weighty IHT bill.
Margaret Jago, technical manager at the firm, explains: "We believe many individuals will have crept over the current IHT threshold without realising they have done so.
"While this type of investment is tax-free throughout their lifetime, when the investor dies, it becomes part of their estate for IHT purposes."
The government has recently committed to increasing the threshold for IHT to £350,000 by April 2010, although the Taxpayers’ Alliance continues to argue for its abolition.
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Wednesday, May 16th, 2007
Professionals with a significant amount invested in an occupational pension should take the opportunity to investigate how their lump-sum death benefit will affect their next of kin’s inheritance tax (IHT) bill, according to one expert.
Abbey Wealth Management’s Neil MacGillivray has reminded investors that the death benefit is not tax-free, because the debt is deferred to a spouse or civil partner.
Speaking to Citywire, Mr MacGillivray suggested that Britons should consider a "carve-out fund" instead, as a means of protecting money otherwise falling within the net of IHT.
Becoming a member of an occupational scheme, a lump sum is paid into the trust on the death of the settler.
The trustee is then afforded two years to allocate the death benefit without IHT implications.
Mr MacGillivray said: "Although this type of planning can be quite expensive, it is worth it for the potential IHT savings – all sizeable pensions should be part of a trust.
"Advisers who practise in this type of trust will be able to build up strong professional connections with professional trustees."
Recent research by the Halifax revealed that the number of properties exceeding the £300,000 IHT threshold has nearly doubled in the last five years.
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Wednesday, May 2nd, 2007
Inheritance tax could impact upon many more people than expect to pay following the loss of a loved one, a financial adviser has suggested.
Simon Botfield of Edward Jones, a stock market investment service, has suggested that many people do not appreciate the full value of their estate, which often extends significantly beyond the obvious residence and savings assets.
"Many people don’t realise how much their estate can amount to once everything is taken into account house, car, possessions, business interests, savings, shares, jewellery and so on," Mr Botfield asserted
Tax is currently charges at 40 per cent for all assets exceeding a £300,000 threshold, which the combined value of such assets can easily exceed.
Mr Botfield also reminded consumers that the common assumption that all assets are passed to the nearest and dearest following a death is often not the case.
"But interests can easily be safeguarded by making a will and taking advice," he continued.
"It is simple, inexpensive and can also help limit any inheritance tax liability."
In this year’s budget, chancellor Gordon Brown announced his intention that the threshold for inheritance tax should be increased to £350,000 by 2010.
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Monday, April 30th, 2007
The number of claims on critical illness insurance policies declined by providers has dropped significantly, according to one group.
Insurer Standard Life has published figures reflecting critical illness claims in 2006 which suggests that declined claims have fallen in number to around 7.5 per cent.
More than three fifths (64 per cent) of claimants on critical illness terms were aged between 40 and 59, the figures revealed, with only three per cent of claimants aged over 60.
And while the average claim value for the year stood at £52,138, the largest payment reached £500,000.
Mick James, protection marketing manager for Standard Life Assurance, said: “There is often a stigma associated with critical illness plans that they don’t pay out, yet we paid over 90 per cent of our customer claims last year.
“These people did not need the added worry of financial stress at a time when their health needs to be their top priority.”
Mr James stopped short of stating that the reduction in the number of declined claims represented the start of a trend, although he stated that efforts were being made to increase the clarity of forms and level of warnings about disclosure.
Of the 7.5 per cent of claims denied by the firm last year, 3.3 per cent were declined as they did not comply with the definitions of the policy while 4.2 per cent were declined because claimants failed to disclose all relevant information.
It is hoped that consumers across the UK will be able to enjoy increased clarity regarding their critical illness policies from today as the Association of British Insurers’ new definitions of critical illness cover are implemented.
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