Inheritance Tax, David's Story

David, an elderly, single gentleman with a fixed and guaranteed source of income along with substantial assets meant his estate would be liable for Inheritance Tax (IHT) on his demise. 

Why they approached us


David was keen to mitigate the IHT liability without making significant gifts of capital to his nearest and dearest being his sister and nephews.

How we helped


Along with being made conversant with the IHT rules and allowances, the client was fully informed of the various courses of action open to him.

We took the approach of looking at what the client’s ultimate objectives were and put in place an overall plan to achieve these. The plan was then segmented and addressed at a pace the client was comfortable with rather than implementing everything in one action.

As well as mitigating their IHT liability by way of varied tax efficient investments to which they have retained access and control the client also reduced their income tax liability which was otherwise unachievable from the fixed receipt of state pension and a secure defined benefit pension.

Use of annual exemptions and the use of making gifts out of income were also undertaken.

The results


As the legislation in this area has changed over the intervening period the client’s situation has been reviewed on a regular on-going basis as have the underlying investments.

The client is more than content that the IHT liability has been reduced significantly by 53%, their income tax liability has reduced year on year and their investments are being actively reviewed to ensure that they continue to meet their objectives and are in line with their tolerance for risk to capital. The underlying investments have provided capital growth which when coupled with the IHT savings ensures that more of the client’s capital is passed on to his loved ones rather than HMRC.

  • Be fully informed in what you can legitimately do just by using allowances and exemptions.
  • Obtain an appreciation of the options open to you and be well versed with the advantages and disadvantages of each.
  • Formulate a plan that does not have to be actioned in one go, but by at least having a plan it can always be changed if and when circumstances and/or legislation changes.
  • Looking at your overall situation may highlight the opportunity to benefit from addressing other issues that were either unforeseen or unthought-of whether they are linked to IHT or not.

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