Towards the end of our Financial Planning Meeting agenda is the topic of Estate Planning and IHT and many of you are addressing this and considering ways of mitigating IHT and helping those that you care about at the same time.

You may or may not be aware that The Office of Tax Simplification (OTS) is currently carrying out a review of the current IHT system, how it works and whether and how it can be simplified. My career in Financial Planning goes back far enough to remember the introduction of Pensions Simplification in April 2006; my experience of giving advice relating to pensions over the last 12 years is it’s been far from simple!

So, what could be on the cards? We have been promised a report in the autumn that will:

• Provide an initial evaluation of the current IHT regime and the implications for tax payers, HMRC and the exchequer
• Identify opportunities for simplifying IHT supported by analysis and evidence
• Offer specific simplification recommendations for the government to consider

Encouragingly, a number of issues have already been recognised:

• Problems encountered navigating IHT and probate forms; having just submitted a Trust return for one of our clients, we have first-hand experience of knowing there is room for simplification of the system!
• Difficulties created for some in having to pay IHT before probate is granted,
• Help with estates where there is no IHT to pay e.g. where a surviving spouse is the main beneficiary,
• Challenges executors face tracing financial records of the deceased; don’t forget your Digital Legacy.

This is just the start; Lifetime transfers and gifts create further complications, Businesses and business property relief and the interaction with Capital Gains tax also appears to be under scrutiny.

The review also questions the complications caused by the provision that estates can benefit from a reduced rate of IHT where 10% of the residuary estate is left to charity and of course there is the Residence Nil Rate Band that was introduced last tax year.

There is certainly room for Simplification!

Two things are clear:

• The treasury is not looking to reduce the amount it raises through IHT!
• If you have been holding off making gifts for IHT planning purposes, now may the time to act!

A report is expected in Autumn 2018 that will provide an initial evaluation and identify opportunities for simplification for consideration.

Now is therefore an opportune time to review the Financial Planning Summary report we prepared for you following your meeting and consider the IHT planning opportunities available to you now, before changes are made and opportunities are lost. As always, please do not hesitate to contact us if you wish to discuss further.

Kindest regards,

Helen Allen
Senior Financial Planning Manager