How Inheritance Tax Planning Could Make You Happy


Posted by: Swindells FP, on September 10, 2012.


A recent survey from the Office of National Statistics found that people who are married, have a job and own their own homes are most likely to be satisfied with their lives. While this is not perhaps the most surprising outcome, the survey does illustrate that peace of mind for many people can be an important contributor to feelings of happiness.

The survey’s findings, that stable relationships and a strong family life can be beneficial to an individual’s wellbeing, seem reasonable. So too is the idea that happiness comes from feeling secure in the knowledge that you are capable of providing for others as well as yourself. This desire to provide for loved ones is the chief principle behind inheritance tax planning.

IHT, which is currently set at a rate of 40%, is only due if the deceased person’s estate is valued above the current Nil Rate Band (NRB) threshold of £325,000, although this limit will be reviewed in 2015. Since April this year individuals who leave 10% of their estate to charity can choose to pay a reduced IHT rate of 36%.

While there is universal recognition that IHT is one of the UK’s biggest tax burdens, many people choose not to address their IHT liability. Swindells Financial Planning believes this reluctance to undertake IHT planning is exacerbated by a number of IHT myths.

Myth 1

Many people wrongly assume that they can avoid IHT by simply giving away their assets. In reality though people only have an annual £3,000 gift exemption allowance, and everything else that a person gives away in the seven years before their death will still potentially be subject to IHT.

Myth 2

Many people still think that paying inheritance tax is ‘only for rich people’, not realising that the value of their property alone pushes them over the NRB threshold. The rapid rise in property prices over the last two decades has ensured that the number of people with estates valued above the NRB has increased dramatically in recent years.

Myth 3

Importantly, many people think that most inheritance tax planning measures are time-consuming and difficult to set up and take too long to come into effect. This is not the case. Swindells Financial Planning has a wealth of experience in inheritance tax planning solutions such as the use of the Octopus Inheritance Tax Service (Octopus ITS), designed to address the main drawbacks of more traditional IHT planning; providing for full IHT-exemption after just two years (provided the investments are still held at the time of death).

Commenting on the ONS survey and inheritance tax planning, Paul Latham, Managing Director at Octopus Investments, said: “There’s no simple answer to what makes people happy but the ONS survey clearly illustrates the value of peace of mind and the positive effect it can have.”

Swindells Financial Planning solutions help to provide peace of mind for our clients that they have taken the necessary steps to ensure that they have looked after the wellbeing of their partners and family. View some  simple case study solutions.

Paul Latham of Octopus investments adds: “There are a number of barriers in place to prevent people prioritising IHT planning, including investor concerns about losing control and access to their money when they might need it. By overcoming these we hope to encourage more people to proactively engage in IHT planning.”

If you would like to find out more regarding our inheritance tax planning solutions that are bespoke to you then please do not hesitate to contact us.

 



|

Enter your email

Get free investment, pensions and wealth management news and advice.

* indicates required

*We will never share your details with any third party.


Categories



Client Stories





Book a consultation


Your Name (required)

Email (required)

Phone Number

Age

Employment Status

Income

What you would like to talk about?

captcha

Enter exactly what you see above






Enter your email to receive free relevant news and updates.

* indicates required

*We will never share your details with any third party.


Latest… View all




Putting the current stock market decline in context


There’s no doubt hyperbolic headlines depicting the recent falls on the world’s financial markets are potentially anxiety-inducing. With the FTSE 100 Index falling to its lowest level since April 2017, the effect of the headlines is to promote a sense of uneasiness; we’re here to remind you that this shouldn’t be the case. Instead of […]

Read more →


Inheritance Tax is an avoidable tax


It is often said that Inheritance Tax is an avoidable tax, but many of us somehow fail to avoid it. Why is this? In our experience, clients’ failure to plan effectively is a result of the following perceived problems: Speed – How often will the thought of having to survive 7 years from the date […]

Read more →


What went wrong with the forecasts?


Reading the tea leaves Investors at year-end are inclined to reflect on the 12 months gone and muse on what the coming year might bring. Aware of this appetite for speculation, themedia tends to feed it with forecasts. These articles can be fun to read, but are even more so a year later. In January […]

Read more →


What should investors make of bitcoin mania?


Bitcoin and other cryptocurrencies are receiving intense media coverage, prompting many investors to wonder whether these new types of electronic money deserve a place in their portfolios. Cryptocurrencies such as bitcoin emerged only in the past decade. Unlike traditional money, no paper notes or metal coins are involved. No central bank issues the currency, and […]

Read more →