THE opportunity to comment on inheritance tax issues arising out of the 2014 budget has predictably provided little fresh material to get excited about.
The headline grabbing proposal to provide IHT exemption for emergency services personnel who die in the line of duty – already in place for armed forces personnel – may be politically correct but in reality is not likely to have a huge impact, unfortunately.
The other announcements amount only to tinkering with small administrative matters and closing obscure loopholes.
Some commentators had been calling for the abolition of IHT altog
THE opportunity to comment on inheritance tax issues arising out of the 2014 budget has predictably provided little fresh material to get excited about.
The headline grabbing proposal to provide IHT exemption for emergency services personnel who die in the line of duty – already in place for armed forces personnel – may be politically correct but in reality is not likely to have a huge impact, unfortunately.
The other announcements amount only to tinkering with small administrative matters and closing obscure loopholes.
Some commentators had been calling for the abolition of IHT altogether, which is probably a step too far, so instead we start another year with a pretty much unchanged regime.
We therefore retain the nil rate band of £325,000 – which has been with us since 2009-10 and, helpfully, the ability to transfer any unused allowance on death to a spouse or civil partner, introduced in 2007. Accordingly, couples with estates worth less than £650,000 do not need to worry much about IHT. Nonetheless those individuals lucky enough to have valuable property, businesses and investments valued in excess of this do not relish the thought of seeing 40 per cent of the taxable estate go to the Exchequer and there are plenty of opportunities to make plans to mitigate this tax.
As with any planning the key is to know the desired end result and not leave things too late – certain transfers of assets need a two-year qualifying period to gain appropriate exemptions and reliefs, and many people are familiar with the concept of the seven-year “clock”, a helpful period during which assets can be transferred so they fall out of IHT charge altogether.
There are useful investment products, as our sister company Moore Stephens Financial Services can advise on, which are also eligible for IHT relief.
Accordingly, it’s probably never too early to start planning, or at least undertake a constant review with your accountant of your assets and how they are structured to ensure such opportunities are not overlooked.
In summary, nothing has changed – it’s been said that IHT is an optional tax though that’s not really true in practical terms – but there remain plenty of opportunities to sensibly plan a taxpayer’s affairs to lessen the burden.
For more information call 01536 461900, email or visit www.moorestephens.co.uk/eastmidlands