IHT is often dubbed ‘Britain’s most hated tax’, and it’s easy to see why. Our assets and incomes are taxed our whole lives, and then if we’ve accrued enough across our lifetime and not spent it, then our heirs may be taxed on our death too.
What can I do?
First things first, ensure that you have an up to date will which is reflective of your wishes, and which has been drafted by a suitably qualified legal professional. Whilst there are a number of bespoke solutions available, our view is that there are 2 principal strategies to employ to attempt to reduce the IHT liability you may leave to your heirs. But first of all, you must have a solid understanding of your asset base, as you may be worrying about a liability you will never have! We have a comprehensive calculator on our website here: https://greenfields.biz/iht-calculator/
- Spend it – Do you want to be the richest person in the graveyard? For many, spending your capital and seeing your ‘net worth’ depreciate year on year is a frightening prospect, and one which goes against the grain. You’ve lived your whole life prudently, putting away a sensible proportion of your income for your retirement. So when you’re in retirement, it’s fine to spend the money that you’d been saving for this specific purpose. I see too many people going without in retirement, and continuing to spend less than they receive each month as it is so engrained to put away 10/20% of your income each month for a ‘rainy day’. But it’s lashing it down outside – today is that rainy day.
- Gift it – If no matter how hard you try you simply can’t spend more than you have coming in, then have you thought about giving away your money/assets to the generations beneath you, or the charities and causes you support? Let’s face it, these are the precise people and organisations who will inherit your estate upon your ultimate demise. Wouldn’t you rather make their lives easier now, and see the benefit of your generosity whilst you’re still alive?
When it comes to estate planning and IHT mitigation strategies, specialist, independent advice should always been sought. Time and time again we see very damaging scenarios where someone has acted on the advice they’ve read on Google/online fora/the Sunday papers. Yet every time, the clients wish they had taken advice before acting. Please don’t join them in the regret camp.