STRATEGIES TO MINIMISE INHERITANCE TAX by Mark Brown
Financial planner, Becketts
You’ve worked hard to accumulate your wealth, you want to pass on as much as possible to your loved ones.
Though there are no quick fixes, here are some of the various strategies we combine to help our clients control their assets, manage their investment risk and return and, ultimately, minimise or erase altogether their inheritance tax burden.
‘Double Dipping’ Business Property Relief (BPR)
This is particularly useful in family situations.
Qualifying BPR assets automatically sit outside of an estate for IHT once it has been owned for two years and the owner can still have full access during their lifetime.
In some cases, it may be possible for BPR to be utilised for a second time in respect of the same business property by the surviving spouse.
Gifts out of normal expenditure exemption
This can be used to share your wealth during your lifetime through
regular gifting out of surplus income.
There are important rules that apply but it can be an effective way to reduce your estate whilst gifting loved ones.
Use of trusts
Historically the most common approach, trusts are still efficient and can be structured in different ways with income being available.
Pension contributions for others
This has significant potential benefits: the size of the estate of the donor reduces whilst providing pension provision for someone else.
The contributions are treated as having been made by members for income tax purposes, helping reduce the tax bill.
This is especially helpful where it affects high income child benefit charges.
Insurance policies written into trust
Utilising a trust avoids proceeds of policies being liable to IHT while making funds immediately available without waiting for a Grant of Probate.
TAKING CARE OF YOUR BUSINESS by Jane Parry
Managing partner, PM+M
Succession planning can be a headache for family businesses.
It’s a crucial subject, requiring careful thought and planning, particularly when some family members work in the business and some don’t.
Often it can get filed in the “too difficult to think about now” box and decisions are put off.
Trusts can be used to provide an effective solution to this. Simply put, a trust is a device which separates the legal control of an asset from the beneficial ownership.
The separation of ownership and control can be particularly useful in the context of succession planning.
A business owner may wish to give away some shares as part of an inheritance tax planning exercise, but might not feel ready to give up full control.
They could place some shares in a trust for the benefit of the children
and future generations and appoint themselves as trustee.
The shares would have been given away for tax planning purposes, but control can be maintained via the role as trustee.
This is a good way of allowing non-working family members to share in some of the benefit from the family company without them having a direct shareholding and being able to have a say in its running, as well as allowing the tax-efficient spreading of income across the family.
At the moment, the tax reliefs attached to trading company shares mean that such planning can usually be undertaken without a tax charge.
Trusts are just one tool that can be used to unlock complex succession problems. If you’d like to talk about unlocking your succession, please get in touch.
Becketts is a trading name of Becketts FS Ltd. Company No. 5122604. Becketts FS Ltd is authorised and regulated by the Financial Conduct Authority FCA Number 409051
Make the most of it. Let’s get talking.
W.
www.beckettsfs.co.uk T. 01253 881 910
We’ll help you protect and grow your wealth so you can make the most of it
Helping you achieve more
Supporting you to make the best decisions for you, your business and family through expert succession, probate, tax, trust and estate planning advice.
Speak to us today: 01254 679131
enquiries@pmm.co.uk www.pmm.co.uk
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WILLS AND PROBATE
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