How can my friend avoid inheritance tax ?

Mchambers

She has approximately £900K worth of assets.

She is keen to minimise inheritance tax but what should she do ?

For example, should she move to Jeresy, invest into Swiss banks accounts, see a IFA, etc ?

Any help much appreciated.

Thanks

Cheeky_Monkey

She's not related to patel is she?

Yorkshireman99

Mchambers wrote: »

She has approximately £900K worth of assets.

She is keen to minimise inheritance tax but what should she do ?

For example, should she move to Jeresy, invest into Swiss banks accounts, see a IFA, etc ?

Any help much appreciated.

Thanks

She needs to se a propfessional advisor specialising in IHT. The average IFA is not up to the job. She needs to ask her solicitopr or accountant for a personal recomendation.

getmore4less

Start spending it and giving it away.

the simplest way to avoid your estate paying IHT is to marry(civil partner) someone and hope they outlive you.

Keep_pedalling

If she is a widow who inherited her husband's estate, owns property and has children who will inherit, then her estate will only attract tax on £50k of her assets. All she needs to avoid it compleatly is to live another 8 months when the residence nil rate band increases.

pollypenny

If she's dead she won't need the money. She won't pay the tax either.

Malthusian

Yorkshireman99 wrote: »

The average IFA is not up to the job.

I disagree, any IFA who has managed to hold on to "independent" status should be able to advise on Inheritance Tax. They are rather tenuously clinging on to the "independent" part of the "IFA" label if they cannot properly advise on products designed to reduce Inheritance Tax liability.

A below-average IFA might not be up to the job, but ringing up any Independent Financial Adviser and asking them if they can advise on Inheritance Tax mitigation is a good starting point. If they cannot help, try another.

In descending order of efficiency, the main things you can do to reduce an IHT bill are:

1) Spend it
2) Give it away, especially surplus income or using the fixed allowances
3) Invest in products which are exempt from IHT if you hold them for two years (these are high risk and could easily lose you more than the 40% IHT bill, for the very reason they are IHT-exempt)
4) Take out whole of life insurance (this doesn't actually reduce an IHT bill, it just spreads the cost while insuring against the risk of your beneficiaries having to sell a specific legacy to pay the bill)

The latter two should only be done with professional advice, and only when the first two have been completely exhausted.

Permanently moving to Jersey might help but you have to move to Jersey. Swiss bank accounts are still subject to IHT if you are UK-domiciled.

And as mentioned the friend may not have an inheritance tax bill anyway if she has two nil rate bands including residential nil rate band available.

getmore4less

Malthusian wrote: »

And as mentioned the friend may not have an inheritance tax bill anyway if she has two nil rate bands including residential nil rate band available.

Just as marrying someone that lives longer can avoid IHT completely, marrying some one that won't(and is poor) can help with the doubling of the nil rate band.

Keep_pedalling

Malthusian wrote: »

I disagree, any IFA who has managed to hold on to "independent" status should be able to advise on Inheritance Tax. They are rather tenuously clinging on to the "independent" part of the "IFA" label if they cannot properly advise on products designed to reduce Inheritance Tax liability.

A below-average IFA might not be up to the job, but ringing up any Independent Financial Adviser and asking them if they can advise on Inheritance Tax mitigation is a good starting point. If they cannot help, try another.

In descending order of efficiency, the main things you can do to reduce an IHT bill are:

1) Spend it
2) Give it away, especially surplus income or using the fixed allowances
3) Invest in products which are exempt from IHT if you hold them for two years (these are high risk and could easily lose you more than the 40% IHT bill, for the very reason they are IHT-exempt)
4) Take out whole of life insurance (this doesn't actually reduce an IHT bill, it just spreads the cost while insuring against the risk of your beneficiaries having to sell a specific legacy to pay the bill)

The latter two should only be done with professional advice, and only when the first two have been completely exhausted.

Permanently moving to Jersey might help but you have to move to Jersey. Swiss bank accounts are still subject to IHT if you are UK-domiciled.

And as mentioned the friend may not have an inheritance tax bill anyway if she has two nil rate bands including residential nil rate band available.

I would go along with this IHT is not rocket science, and there is no longer any need for complex trust arrangements unless you one of the very rich.

We have, in conjunction with our IFA, used all 4 of those methods over the last few years to keep our IHT liability down, although equity gains and house price inflation has basically put the value of our estate back to where it was 5 years ago after some generous gifting. Can't complain though its a nice "problem" to have.