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Over the threshold
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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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