Inheritance Tax Facts and Figures

The revenue generated by inheritance tax has reached £1.7bn in the first 6 months of this year, according to figures released by Halifax Bank. Their research also indicates that the TOTAL annual IHT revenue has increased from £1.7bn pa to £3.3bn pa since 1998, mainly because of house price increases during this period.

It is now estimated that by year 2020 a fifth of all properties in the UK will be valuable enough on their own to attract an IHT charge.

Even with the rise in the IHT threshold to £325,000 by the year 2010, the Halifax believe the Government should increase the threshold to £430,000 to account for the increase in property prices. In the other corner, the Treasury argues that it has not reformed IHT because currently only the top 6% of estates pay the tax, but the number of families potentially caught is much higher.

So, what strategies can you implement to plan ahead and make sure your beneficiaries do not share too much of your estate with Gordon Brown?

1. Write your wills (if you're married) to leave up to the IHT threshold (currently £285,000) to a Will Trust on first death. This will potentially save £114,000 in tax.

2. Gift £3,000 pa free of IHT.

3. Use specialist investment products so that any growth in value is outside of your estate.

4. If you own business assets you may, subject to all the very important considerations, wish to make a gift whilst 100% business property relief and agricultural property relief is available.  

5. Be aware of the Gift With Reservation rules and the Pre-Owned Assets rules when implementing any form of IHT planning. We'll try and cover these in the future.

The Key Considerations

You need to decide whether you want your assets to go to your chosen
beneficiaries, or pass on a percentage of your wealth to Gordon Brown.
By taking the time to put into place effective IHT strategies you can
ensure that your beneficiaries will receive the right amount of your wealth and have sufficient funds in place for any IHT due.