Structuring your affairs efficiently means starting the correct planning early enough
Today we are looking at the second part of this month’s chapter on estates.
Effect of the proposed changes
Few taxes are quite as emotive – or as politicised – as IHT. The structures into which you transfer your assets can have lasting consequences for you and your family. The current rate of IHT payable is 40% on property, money and possessions above the nil-rate band. The rate may be reduced to 36% if 10% or more of the estate is left to charity.
It makes sense to ensure that your affairs are structured in the most tax-efficient way possible. However, it isn’t easy to keep up with the many exemptions and reliefs available. So what should you consider?
Lifetime gifts to individuals are potentially exempt transfers and fall outside the scope of IHT, provided the donor survives at least seven years from the date of the gift.
Trusts can sometimes help you to eliminate unnecessary tax charges, enabling the maximum possible part of your family’s wealth to be preserved. You may like to transfer part of your wealth to a family member but still retain control; our specialists can advise on setting up trusts and can take care of all the administration.
One important way to minimise IHT is to make a Will, so as to leave your family with the maximum assets and at the least tax cost.
Business and corporate structures
If you have a business, it is also important to examine the structure of your business when considering your affairs. Changing the structure of a business can have significant tax implications.
Enjoy special concessions
The treatment for IHT purposes is more favourable for some assets than others. Business assets and shares in unquoted companies, agricultural land and works of art, for example, all benefit from special concessions which may assist in passing wealth from one generation to the next.
Making gifts for charitable purposes can be highly effective in potentially reducing an IHT charge on death.