UK households can escape HMRC inheritance tax using 'three tricks'

Certain inheritance tax strategies can lead to "significant" savings, an expert has said, as inheritance tax looks set to clamour more and more households under the Labour Party government.
-Credit:Reach Publishing Services Limited


UK households can escape HMRC inheritance tax bills using three "effective" tricks. Certain inheritance tax strategies can lead to "significant" savings, an expert has said, as inheritance tax looks set to clamour more and more households under the Labour Party government.

Ian Dyall, head of estate planning at wealth management firm Evelyn Partners, said: “Estate planning is about a lot more than just inheritance tax. It’s a peace-of-mind strategy to help families pass on wealth in the best way, one that meets as many of their needs and objectives as possible.”

He said: “There’s an important opportunity for many households to look at their estate planning - not just through a tax lens but also thinking about what they want to do with their assets and what will end up being best for the family’s future.”

ADVERTISEMENT

READ MORE: The 'fabulous' £26 Next top that's 'perfect' for the gym

READ MORE: Dunelm duvet cover less than £20 looks 'beautiful on the bed' and shoppers say 'very unusual'

READ MORE UK faces 4cm snow per hour this week with 'exact times' flurries fall announced

His tricks including making a Will, gifting or spending, and rethinking pensions. He said: “One perennial remedy for this is to spend more on yourself and your family or to give away more wealth during lifetime to shrink the estate so that less of it is taxable at death.”

Ian says: "More estates will find they are likely to incur growing IHT liabilities, whether that is the result of the inclusion of pensions as a taxable asset, or the dilution of reliefs, or just because growth in asset values is dragging them over the nil-rate bands. Their residence nil-rate band could also start to disappear if their estate starts to be valued at more than £2million.[2]

ADVERTISEMENT

"One perennial remedy for this is to spend more on yourself and your family or to give away more wealth during lifetime to shrink the estate so that less of it is taxable at death. Many older savers and investors find it difficult to switch from accumulating wealth to spending it or giving it away, so sometimes this can require a bit of a change of outlook. Then the big question is usually, are you happy to lose control of the funds that you’re giving away? Both in the sense of whether it leaves you with sufficient funds to live out the rest of your life the way you want to, which is where a financial planner’s forecasts can come in very useful. And also of whether you’re happy that your relatives will use your generous gifts in a way that you’d prefer.

"Trusts put in place with expert advice can be invaluable because this is a way to retain some control over assets while still gifting them and setting the “seven-year clock” ticking. Families must also pay heed to the gifting rules which are not straightforward.

"It’s important not to make drastic decisions off the back of the Budget announcements. Now is probably the time to think about a longer-term gifting plan rather than making ad hoc handouts, ideally with the assistance of professional advice."