On average UK residential buildings make up over 35% of the value of assets within estates that are subject to inheritance tax (with shares and securities and cash making up the bulk of the balance). What is more, the chancellor’s IHT revenue in 1999-2000 was over £2,000 million and rises substantially each year.
IHT was introduced in 1986 when it replaced Capital Transfer Tax (the successor of Estate Duty ten years earlier). It can be a complicated tax but there are many reliefs and planning opportunities, which make IHT an almost ‘voluntary’ tax. In fact, in 1999/2000 only 4% of estates actually had to pay any tax, demonstrating clearly that planning is in widespread use and should be an essential aspect of your overall financial planning strategy.
Writing a will and equalization of assets between spouses to make full use of the nil rate band make a good starting point, followed closely by the use of the lifetime gift exemption with the seven year tapering rule. It is however very important that planning is tailored to individual circumstances and Windsor Stebbing Marsh is a London firm that specializes in providing tax advice in the property sector.
So make sure your wealth goes where you want it to – and not to Hector the inspector!
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
