Paying IHT is no longer just for the wealthy. The IHT nil rate band has increased in the last 10 years by some 14 per cent, whilst the average house price has increased by 19 per cent * in the South West (or 70 per cent for those lucky enough to own property in London!).
This has meant that more and more taxpayers are drawn into the net of IHT. More ‘asset rich, income poor’ taxpayers mean that fewer of the affected individuals justify paying a tax planner to help and some individuals are even blissfully unaware of the sums of money that could go HMRC’s way on their unfortunate death.
Along with this general shift in the make-up of people affected by IHT, there has been a general shift in opinion regarding tax planning.
Comedians and entertainers’ public profiles have led to massive media coverage of the high-end, aggressive schemes and public opinion has invariably been ‘shame on them for not paying what is rightfully due’.
Although, a cynic may suggest that the average person would jump at the chance to save themselves tax, if the opportunity presented itself?
For a tax planner, the question is no longer ‘what does the legislation say?’ but more ‘what will HMRC think?’ and ‘is my client in the group of people that HMRC will target to raise publicity?’
However, to quote Judge Lord Clyde (from 1929): “No man in the country is under the smallest obligation, moral or other, so to arrange his legal relations to his business or property as to enable the Inland Revenue to put the largest possible shovel in his stores……..”
It is still legal to arrange your affairs to minimise your tax burden – surprising news for many of the tabloid editors, one might imagine.
By gifting, restructuring, planning and living long enough it is possible to reduce the IHT due on your death to zero. IHT may, therefore, be deemed a ‘voluntary tax’ on those children whose parents did not plan well or early enough.
If you are interested in saving IHT to allow your children to benefit from more of your family wealth, please contact us.
* Nationwide House Price Index Q1 2007 to Q1 2017