DO YOU WANT TO PAY LESS INHERITANCE TAX?
Inheritance Tax (IHT) is payable on death – and will fall due on the total value of assets around the world.
There is even Inheritance Tax payable when someone is non-UK Resident for tax purposes.
Everything relates to ‘Domicile’ – which is given to you at Birth and whilst it can be changed, it is often very difficult to shake off the reaches of HMRC! There have been some spectacular cases where Entrepreneurs abroad have had to pay millions of pounds of IHT simply because they still have links to the UK in terms of family and homes.
Whilst we know this is a complex area of taxation, and we do have the expertise to deal with anything that is presented to us, we tend to focus on specific IHT problems that occur on a regular basis:
UK Property (which includes Residential property and Holiday Lettings) tends to be treated as an ‘investment’ and not a ‘trade’ – so even if your property is held within a UK Limited Company – the value of the shares will still attract IHT. There is no ‘Buisiness Property Relief’ – unless the company is seen as a ‘trade’.
Rather than have your estate get dragged into a lengthy and expensive discussion with HMRC, it is far easier and cost effective to make use of statutory structures where the value of assets of all kinds are treated as ‘exempt’ and therefore pay no IHT.
The use of loans as ‘mortgages’ is also helpful in reducing the value of an estate for IHT purposes – so where we cannot get the planning in place right from the start, we might be able to work with a complex current scenario and end up with loans that negate the value – and of course save IHT in the process.
It is not possible to wake up one day and transfer £100m of your estate into a tax exempt structure and hope that HMRC will be happy with you sheltering 100% of your estate today – just because you are ill and have a shorter life expectancy. Things have to be done properly.
If you are using a QNUPS (Qualifying Non-UK Pension) there will need to be a formal process to assess your needs and calculate what capital value represents the ‘right’ amount to set aside to meet these long term needs. We always make sure that your estate will have the full step-by-step support in answering any HMRC questions. Better to add a step and pay a little more for a ‘Report’ from an Actuary – than to pay 40% of your estate to HMRC!
With inheritance tax planning the aim is to begin putting the long-term strategy into place as soon as possible, so as to minimise the IHT payable.
There is nothing stopping a wealthy entrepreneur from managing their affairs so that there is very little IHT payable on their estate, even if this includes large property portfolios.
Most Advisors, such as IFA’s and Accountants do not have the internal experts to assess a client’s FULL situation – and come up with the best overall strategy.
As I have worked in the tax planning field for over 30 years, I have personal access to experts in all taxes and can combine these experts into a unique service that really does go beyond what you’d get from your normal ‘Advisors’.
Every wealthy entrepreneur or property investor I have ever met had their own Accountant, Solicitor and Financial Advisor – yet in 90% of cases we were able to dramatically able to improve their overall exposure to UK taxes.
What is vital is the proper implementation – with care at every stage.
This is why we offer a FREE consultation – as it lets us explore the current situation before jumping in with ‘solutions’.
If you are interested in reducing your current and/or future income tax exposure, do not hesitate to call or email us now.
Paul Stewart – Specialist Tax Advisor Links: