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Record Inheritance Tax bills are a reminder of the need for good estate planning .
igures released by HMRC confirm that , in the 2015 / 16 tax year , the government benefited from Inheritance Tax ( IHT ) to the tune of £ 4.7 billion 1 . It is the first time annual revenues have exceeded £ 4 billion and represents a 22 % increase on the amount of tax paid in the previous tax year . The income received by the Treasury from IHT has soared by 70 % in the last five years 1 .
Analysis by the Office for Budget Responsibility ( OBR ) suggests that the number of estates on which IHT has to be paid has quadrupled since 2010 2 . Furthermore , it believes that more than 40,000 estates will be liable for the tax in 2016 / 17 .
The rise in death duties reflects the surge in residential property prices , as well as the strong recovery in other asset values , which has dragged more households into the IHT net . The OBR reports that housing assets now account for around half of the value of estates notified for probate , highlighting the impact that rising property prices have had on IHT receipts . Meanwhile , the IHT nilrate band has remained fixed at £ 325,000 per person (£ 650,000 for couples ) since 2009 , so it ’ s not surprising that the number of families paying IHT has risen .
At the heart of this problem remains the simple fact that IHT is a voluntary tax ; the Treasury relies on inertia and people ’ s reluctance to confront the issue . The result is the record level of revenue generated , money which could instead stay in the family to support future generations .
The boost to the Treasury ’ s coffers is a reminder of the damaging effect death duties can have on families ’ plans to create and pass on wealth , and also that there are perfectly legitimate ways of mitigating IHT through foresight and careful financial planning . The mitigation of IHT does not require highpowered tax planning ; only a willingness to discuss the issue , take action and make use of the many options available , such as establishing trusts where appropriate , and making use of annual exemptions like gifting .
The levels and bases of taxation , and reliefs from taxation , can change at any time and are dependent on individual circumstances .
Berkley Square Private Clients Ltd is inviting The Business Exchange readers to discover the simple yet highly effective steps you can take to protect your wealth and stay in control - helping the right amount of it pass to the right people at the right time .
Call 01249 591141 for more information or your complimentary guide to inheritance tax .
If you are uncertain about how you stand regarding IHT and would like to know more about how to prevent much of your money falling into the hands of HMRC , or your local authority through long term care fees , book your consultation today .
For further information or to request your complimentary guide to Inheritance Tax , please contact Berkley Square Private Clients Ltd of St . James ’ s Place Wealth Management . A member of the team can be contacted by phone on 01249 591141 .
BERKLEY SQUARE PRIVATE CLIENTS LTD
Senior Partner Practice of St . James ’ s Place Wealth Management
Tel : 01249 591141 Email : jason . ritchie @ sjpp . co . uk Web : www . berkleysquarepc . co . uk
1
HMRC , April 2016
2
Office for Budget Responsibility , March 2016
Trusts are not regulated by the Financial Conduct Authority .
The Partner Practice represents only St . James ’ s Place Wealth Management plc ( which is authorised and regulated by the Financial Conduct Authority ) for the purpose of advising solely on the Group ’ s wealth management products and services , more details of which are set out on the Group ’ s website www . sjp . co . uk / products . The title ‘ Partner Practice ’ is the marketing term used to describe St . James ’ s Place representatives .
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