Inheritance Tax & Capital Gains Tax

Having striven all one’s life to build up assets (after the incidence of Income Tax, Capital Gains Tax, VAT, etc) to secure financial peace of mind and to pass wealth on to one’s family eventually, it may seem unfair that a person, or rather their family, is then taxed again on those accumulated assets on death. Nevertheless, this “double” taxation exists and dates back to the introduction at the end of the last century of what might generically be called death duties. The tax applies to all estates over £325,000 in value and is levied at 40%.

Of course Inheritance Tax is something of a political tax and there is no guarantee that the current rules will not be tightened, the tax rate increased and planning opportunities reduced. This is particularly so at the present time with the dearth of tax revenues flowing into the Treasury.

Inheritance Tax can have disastrous consequences for families and lead to a very substantial part of a person’s estate being paid to Her Majesty’s Revenue & Customs. An unwelcome Inheritance Tax bill may necessitate the sale of family assets which the family would have preferred to attain. Such a forced sale may come at a difficult time and result in less than full value being obtained. The tax can have a particularly devastating effect if the assets are not easily realisable. Substantial borrowings might be needed and these may be difficult to service or redeem.

Worst of all, Inheritance Tax can create financial problems and anxiety for a person’s family.

It has been said that only the negligent or ill-advised need face effective taxation on wealth and we at True Dynamic feel that there is certainly considerable scope for mitigating the potential Inheritance Tax charge. Specialist advice and sensible tax planning can reduce, if not eliminate, the tax burden and alleviate the difficulties the liability might otherwise cause.

Although not a comprehensive list, sensible tax planning steps can involve:

  • Maximising reliefs and exemptions to minimise the ultimate liability;
  • The use of trusts, to retain a degree of control while removing the assets form the person’s estate;
  • Tax effective and flexible Wills;
  • Lifetime giving, while ensuring attendant Capital Gains Tax implications are minimised;
  • Moving ownership of assets around a family for greater tax effectiveness;
  • Tax planning arrangements in connection with the family home;
  • Avoiding pitfalls, such as the gift with reservation of benefit provisions and the Pre Owned Assets rules and the new rules relating to trusts;
  • Tax planning and the professional business.

Our specialist is Peter Legg, a consultant to True Dynamic. Peter began his career in the Capital Taxes Office of HMRC, where he worked for 18 years. He has since been advising high net worth clients and professional advisers on estate planning and trust taxation for 25 years and presents seminars extensively around the country; he works closely with ourselves on Inheritance Tax problems that arise for our high net worth clients.

In view of all of the above, True Dynamic invites all of those who might be interested in looking at this particular aspect of their affairs to an Inheritance Tax Planning “surgery”; after an analysis of your particular set of circumstances, we will be happy to put forward a raft of planning ideas for your consideration and then take the matter forward as appropriate.

If you are interested in securing a place on 27 November 2014 at 6.00 pm for 6.30 pm a free seminar, please email us your name and telephone number to as soon as possible as there are a limited number seats available.

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