Succession Planning - get your affairs in order before reforms

  • 3rd July 2020

When times get hard, many are challenged with not only managing their own personal finances but also looking at what they can do to assist the next generation.

When times get hard, many are challenged with not only managing their own personal finances but also looking at what they can do to assist the next generation.

When it comes to succession planning, this area can be incredibly complex. Inheritance Tax (IHT) for example being particularly cumbersome. Whilst some are calling for IHT to be simplified, there is a strong possibility that IHT reforms could be on their way as the Government looks at ways to start to recoup some of the coronavirus related public spending.

There were already rumblings before the COVID-19 outbreak about changes that were being considered to IHT. These include:

  • Introduce an IHT charge on all lifetime gifts in excess of £30,000 pa.
  • Abolition of Agricultural Property Relief, Business Relief (formerly Business Property Relief) and all other reliefs, except spousal and charity exemption
  • The rate of IHT on death to be lowered to between 10% and 20%
  • Ability to pay IHT on death or lifetime transfers in 10-year instalments for land and businesses to be retained, but reformed
  • Radical changes to excluded property trusts and fundamental changes to the treatment of trusts
  • Obligation to report lifetime gifts over a de-minimus limit suggested at £10k

The points above are a summary of the recommendations pre-coronavirus so we wait with bated breath to see what changes are planned. IHT however looks to be one of the areas the government will look at to get back some much needed money into the pot. Don’t let it be yours.

When it comes to succession planning for those with material wealth, you should have a plan in place by the time you hit your 40s at the latest. It is paramount that you look at your exposure to IHT and work with a professional adviser to put plans in place to mitigate the impacts.

A professional adviser can look to ensure the appropriate vehicles and tax wrappers are used to protect your wealth and ensure it gets passed on to the next generation in the most effective way.

HMRC will undoubtedly pick up on their investigations of UHNW individuals and trusts in the near future as this is an area that provides lucrative returns for them. This is why we suggest looking at your succession plans now and keep your finances in your hands, not HMRC’s.

For a personal recommendation based on your individual circumstances, please contact Forrester Boyd Wealth Management for independent, no obligation advice.

All data and figures referred to in our news section are correct at the date of publishing and should not be relied upon as still current.