Date Published: 28/01/2021 17:05
A survey of financial advisers has found that more than half believe they will have to deal with more Inheritance Tax cases over the next year. Jillian Thomas takes a look at the figures.
They do say there are only two things certain in life: death and taxes. And, as we all know, death can lead to taxes in the form of Inheritance Tax (IHT).
Mitigating against IHT is an important part of tax planning. After all, who do you want to leave your belongings to: the taxman or your loved ones?
Now with the sad situation of increased deaths due to Covid-19 we are dealing with more cases of sorting out IHT. In fact, 54 per cent of financial planners in the Foresight survey said they thought there would be more IHT cases to deal with, with many already reporting an upturn.
IHT is a complicated matter. And mitigating against your liabilities depends on many factors. One that is adding to the complexity of the situation is Covid-19, which presents a number of challenges for more traditional IHT planning solutions like insurance, gifting and trusts. According to Foresight’s research into the UK life insurance market, COVID-19 has caused delays of between three and six months for life insurance cases that require medical underwriting. This presents a real problem for older clients interested in mitigating their IHT liability swiftly, as the maximum sum assured for 76+ year olds without requiring medical examination is just £144,000 on average.
It's also intuitive that the pandemic makes gifting and trust planning less attractive to investors concerned about needing to survive for seven years before the assets are fully exempt from IHT. So, it is worth looking at other methods; for example Business Relief for business owners, which may be a possibility.
But each case does need to be looked at individually, so please do get in touch if you want to discuss mitigating IHT.
No individual investment advice is given, nor intended to be given in this article and liability will be accepted in respect of any action you may take as a result of reading this article. If you are unsure you are urged to take independent investment advice.
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