Many people are considering reducing the size of their estate to minimise the Inheritance Tax (IHT) that will be payable on their death.
Recent research* estimates that nearly seven million parents have already given their children around £227bn of their wealth early in order to reduce the amount of IHT payable on their estates. A further 6.5m are thought to be considering similar moves.
Using trusts and life policies
Many families are using trusts to ringfence assets, effectively removing their value from their estates. However, anyone considering giving away assets in their lifetime should take professional advice. Inheritance Tax is complex and lifetime gifts can end up being taken into consideration for tax purposes if all the conditions applying to these types of gifts aren’t fulfilled. Also, Chancellor Philip Hammond earlier this year ordered a review of the IHT system, the implications of which we will monitor closely.
The Financial Conduct Authority does not regulate some forms of taxation advice.
*Source – Direct Line Group, Oct 2018