Inheritance Tax (IHT) mitigation

An Inheritance Tax mitigation strategy used to be a rare requirement, needed only by a few wealthy individuals who were aware enough to undertake timeous estate planning.

Now however, with property price rises and an increase in home-ownership, a large proportion of UK domiciled individuals will be exposed to inheritance tax (IHT) levied on their estates on death.

Traditionally, Inheritance Tax mitigation has involved costly life assurance plans to meet the potential liability, or the gifting of assets from the estate to reduce the potential liability.

Most individuals, though concerned with potential IHT, are not willing to surrender control of their assets or the income arising from them; nor are they prepared to undertake costly avoidance measures.

It is possible however to retain control of one’s assets, ownership and the income whilst at the same time reducing or mitigating entirely the potential Inheritance Tax on one’s estate.

Strategies for Inheritance Tax Mitigation

Some potential strategies for reduction of tax are listed below, but please contact us direct to discuss your own personal situation.

  • Investments into specialist trusts provide an immediate reduction in the value of the asset for IHT purposes and allows for ‘income’ to be drawn during the remainder of the life of the settlor. Access to capital may also be possible.
  • Assets pregnant with gain may be disposed of and the gain rolled over into an investment benefiting from Business Property Relief (BPR). These investments would fall out of the estate for IHT purposes after 24 months.
  • Where a large part of an estate comprises the family home, it is possible to remove the value of the residence from the estate whilst continuing to live there, and without falling foul of the ‘gift with reservation’ rules.

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