During Rishi Sunak’s most recent Budget, IHT reform was largely left out of the Government’s fiscal plans, which came as a surprise to many. While Mr Sunak resisted the temptation to hike Inheritance Tax on wealthier households, bills are expected to grow over the coming months and years as the economy recovers from the pandemic. Earlier this year, the Chancellor announced the freeze of the nil rate band and residence nil rate band which is likely to be the main cause of the soaring IHT bills.
“It’s not as straightforward as just simply taking your cash out and then using that cash as a gift, or indeed buying other assets.
“Once you’ve done that, I think the best form of advice is to spend that money to enjoy later life.
“We, the Brits, have a very interesting focus on life which is to save money for a rainy day and keep it under the mattress, as it were.
“Actually, I think the best form of common sense advice is to enjoy the money that you have in life.
“There’ll be significant assets that you can still pass to the second generation but it’s really important that you reduce and benefit from your assets that have in life as well.”
The financial expert also outlined what people should look out for when attempting to mitigate the cost of their
He added: “There’s a number of means to mitigate the exposure to inheritance tax someone might face.
“Most importantly, there’s two aspects to remember. Making sure that the Will is in place, kept up to date and professionally drafted, instead of an ‘off the shelf’ will.
“It’s really important that the wishes are understood and its provisioned appropriately and legally.
“The second one is when looking at mitigation opportunities, some might be very obvious, but the ones that aren’t so obvious may end up costing those you leave behind a lot more.
“This is simply because the debts from interest rates may end up being a lot more. While also, whilst capital gains taxes us less, you may still be passing on a capital gains tax exposure to the individuals that you’re passing our wealth to.”
IHT is a tax on someone’s estate, which includes their money, possessions and property, after they have passed away.
No Inheritance Tax is paid on estates which are valued below the £325,000 threshold or if the recently deceased leaves everything above this amount to their loved ones or a charity.
In light of this potential expense, many people plan ahead of their eventual deaths to stop their hard-earned money from being lost once they pass away.