The EASIEST & CHEAPEST way to beat Inheritance Tax

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Principles Personal Finance

Principles Personal Finance

Күн бұрын

Пікірлер: 75
@ymwan
@ymwan 3 күн бұрын
One option is to leave the country, now made easier with the domicile rule changes. This will take 10 years for most to lose the 'tail' if the 7 year giving grace is not suitable for the individual.
@andyballard1883
@andyballard1883 2 күн бұрын
A crucial point not mentioned with regard to insurance written in trust is that the projected payout decreases over time . This was done 25 years ago for my mother by an 'advisor' and now after paying £1,300 per year premium the policy is only worth about a quarter of the project £100k payout at inception. Setting one of these up early i.e in your 50s can be a big rip off over the long term
@PrinciplesPersonalFinance
@PrinciplesPersonalFinance 18 сағат бұрын
I'm sorry to hear that about your Mum and the disappointment with the policy setup. Not all policies decrease over time (only ones with a stated decreasing term). These policies are typically used to cover mortgages. It would be very strange to set up a decreasing term assurance policy for inheritance tax planning unless it was specifically designed as part of a gifting strategy in which the estate value is reduced over time. I can't really speculate too much as I don't know, but it does appear to be an unusual setup and not what you'd typically see with most IHT planning.
@andyballard1883
@andyballard1883 16 сағат бұрын
@PrinciplesPersonalFinance At the time of setup she didn't even have a mortgage, it was sold to her as a way to cover the inheritance tax liability for her children and now 25 or so years later it would not pay out anything like the original amount. It's of little consequence now anyway because her house had to be sold to fund care home costs and at the best part of 100k a year I doubt IHT will be an issue
@EvoraGT430
@EvoraGT430 3 күн бұрын
Excellent info, thanks.
@PrinciplesPersonalFinance
@PrinciplesPersonalFinance 3 күн бұрын
Thank you! Appreciate you watching.
@tev9437
@tev9437 3 күн бұрын
A Joint life, second death, WOL, funded out of surplus income usually offer fantastic value (if taken out at a sensible age). The point at which the premiums equal the sum assured can be so far into the future that (to the client and their family) it ceases to be an insurance policy and actually becomes an investment.
@almostthere-q6c
@almostthere-q6c 3 күн бұрын
This was budget was painful for me as I have a large pension fund. The real bugger from my perspective though is not the tax but who has to pay it. My children have to find the money to pay the tax before they can access the assets that they are going to benefit from.. This is just crazy as it just gives money to the banks as they would need a loan to pay the tax and then only pay that loan back when my house was sold. Also the IHT400 forms are a bureaucrats wet dream. I did my mother's which was 80 pages over 13 different forms even though there was no tax to pay as her estate fell below the thresholds. Most people will probably pay a solicitor to do it for them which will cost around £10K too.
@steve6375
@steve6375 3 күн бұрын
I was in a similar situation (but the solicitors bill was nowhere near that much). My mother left my son her house. This is one thing to watch out for - leaving your house to a youngish person (e.g. grandchild) who does not currently own their own house. That means that they will now own your old house and so they no longer qualify as a 'first time buyer'. This will affect their LISA if they have one or any 'first time buyer' discounts on new houses inc. stamp duty, etc. One way around this is for the executor to sell the house first before distributing the proceeds (assuming the house is not wanted by the inheritor).
@PrinciplesPersonalFinance
@PrinciplesPersonalFinance 2 күн бұрын
Thanks for watching. I do have serious concerns on the current administration setup with pensions due to be in the estate from 2027. It does appear likely to cause poor outcomes, wasted time etc.
@TheSilvercue
@TheSilvercue 3 күн бұрын
This doesn’t change the fact that Labour have shafted so many people. I have been putting everything into my DC pension so I can draw down growth to live off and leave the pot to my son. Now that will be taxed at 40% and if I live to 75, then he pays income tax too!! Gifting does not really help as my pot dwindles too much to live off the growth. I also have to guess when I will die! If I die tomorrow my estate will be taxed £300k just because I have planned for my future! I don’t even earn much.
@aaronclarke7839
@aaronclarke7839 3 күн бұрын
The option of leaving the pot to your son only became possible in 2015 with Pensions Freedoms. Therefore, most of your contributions would have been made under the assumption of a compulsory annuity. The post-2015 loophole was always going to be closed.
@philldavies7940
@philldavies7940 3 күн бұрын
I'm in much the same situation. If gold was not so expensive at the moment I'd consider taking £50k out per annum (far above what I need but just within the 20% limit) and using it buying sovereigns and hiding them in the garden, just remember to tell the kids and wife where you've buried them. I rather suspect its why this government doesn't like the modern day equivalent, bit coins. It feels like we may as well have spent our life irresponsibly, booze, partying and expensive holidays, leaving nothing for the tax man to pilfer off our not so cold corpses.
@Misiu223
@Misiu223 3 күн бұрын
I totally agree. I have been paying into my pension for 20 years, only for these second class thieves to try and take it all
@TheSilvercue
@TheSilvercue 3 күн бұрын
@@aaronclarke7839 most of my contributions have been in the last 10 years. I put half my salary into my pension, I put the minimum in 10,years ago
@TheSilvercue
@TheSilvercue 3 күн бұрын
@@philldavies7940 after my pension, my next biggest investment is crypto. It is the best performing asset class and has been since it was created, though these financial advisors will never face that! I will never declare that, I will just give the wallet keys to my son.
@bonditltd5346
@bonditltd5346 3 күн бұрын
IHT is a diabolical tax and the most despised one. But people with reasonable assets can easily leave the U.K. for 10 years and the U.K. will lose out. Labour - I get the message. You don’t want us here . That’s fine. I’ll take my 3 companies & 1 charity and leave. Make everyone redundant and have a simpler life. Thank you Labour for making it such an easy choice 😊
@madeleinebell559
@madeleinebell559 2 күн бұрын
Surely this is only an option for people with no family &/or friends they would miss.
@bonditltd5346
@bonditltd5346 2 күн бұрын
@ people are allowed to visit and can take family with them. Good Friends will visit. There’s no downside
@madeleinebell559
@madeleinebell559 Күн бұрын
@@bonditltd5346I'm sure it's Ok for some but I would miss my friends and family too much if I left and I only saw them on visits. It would be unreasonable to expect my children including their partners and my grandchildren to uproot themselves and move oversees just so I could save tax when I'm dead.
@bonditltd5346
@bonditltd5346 Күн бұрын
@@madeleinebell559 First - no one is asking you to. Second - It depends on the situation and provision involved. So if you have an individual that supports the whole family , that family also has a choice and it’s a financial decision - stay and pay the high inheritance, or leave ( probably to a sunnier, warmer country) and have it all. You’ll find it’s not a difficult choice. But if you’ve f”ck all, it doesn’t matter.
@neilcook1652
@neilcook1652 3 күн бұрын
Very reassuring, thank you
@PrinciplesPersonalFinance
@PrinciplesPersonalFinance 3 күн бұрын
You're welcome Neil, thanks for watching.
@DKNW62
@DKNW62 2 күн бұрын
How are modest gifts tracked re the 7 year period?
@PrinciplesPersonalFinance
@PrinciplesPersonalFinance Күн бұрын
Hi, records which are intended to fall in any exemption need to be kept in a clear record if HMRC challenge this at a later stage. There's not prescribed requirement, but we tend to record it internally and you can also use the area on the IHT400 form.
@hangman1244
@hangman1244 3 күн бұрын
It feels like arranging the deck chairs on the Titanic. if you don't want to pay IHT go somewhere it is not payable, there are many countries which don't charge IHT. Also in this video there is no mention of the Double or Triple Tax charge. Greedy Rachel saw a big pot of money and popped her snout in. Upended a lifetime of planning for many, and seems completely unfair to move the goalposts mid game. All existing pensions should be excluded from IHT as that was the agreement when paying it in. All new pension contributions can be whatever she decides, then people can choose whether they like the new pensions Tax structure, or decide that they are better off not saving 20% and spend it today.
@andyballard1883
@andyballard1883 2 күн бұрын
Are you going to do a video on leaving the country ?, one of the under the radar changes made in the recent Budget appears to be the Gov extending the time you need to have left the uk for for 3 years to 10 years to not be liable for UK IHT. This is due to be in law from this coming April so does that mean if you formally (i.e notify HMRC) exit the UK before that date then you will only have the 3 year duration apply.
@PrinciplesPersonalFinance
@PrinciplesPersonalFinance Күн бұрын
Hi, no I'm not. There's a host of rules around this and it's just not content that interests me or I think applies to the majority of my audience.
@andyballard1883
@andyballard1883 Күн бұрын
@@PrinciplesPersonalFinance Thank you for taking the time to reply 👍
@stephencole9289
@stephencole9289 20 сағат бұрын
I thought the PET (potentiall exempt transfer) liability tapers off ie if die after 6 years then only the 1/7th remaining was considered taxable. But you imply the whole amount falls back into the inheritence liable amount !!! Thats doesnt sound right and/or is very unfair.
@PrinciplesPersonalFinance
@PrinciplesPersonalFinance 18 сағат бұрын
Hi, this is a great comment and it's actually something that got cut from the video as it was already too long! Tapering can apply to gifts but it applies to the tax, not the gift. What that means is that if it remains within the nil-rate band than tapering may not apply. I felt that while this is an interesting point, it wasn't core to the message in the video and wasn't worth the 5 minutes it would need to run through properly and give an example of. Thanks for watching.
@Mindrush
@Mindrush 3 күн бұрын
If Sarah gifts this money, would she be affected by the £100 interest rule? Ie, if her child earns £100 interest from their savings, is this to be reported to HMRC and Sarah could potentially be taxed on this.
@Mallarkey
@Mallarkey 3 күн бұрын
Isn't that for actual children? I'd assumed "Sarah's child" was an adult...Sarah is 78.
@Mindrush
@Mindrush 2 күн бұрын
@Mallarkey Sarah adopted, her child is aged 12. How does this work?
@andyasia
@andyasia 3 күн бұрын
Surely though you can only put £325k into a trust without a 20% charge ?
@PrinciplesPersonalFinance
@PrinciplesPersonalFinance 3 күн бұрын
Thanks for watching. This is an answer with a lot of technical caveats, so to summarise it at a high level: - Not all transfers into trust are chargeable lifetime transfers and are subject to the 20% charge. So there is nuance there which needs to be considered depending on the trust structure. - While assigned a life policy into trust can be a chargeable lifetime transfer, unless the individual is in poor health there are unlikely to be any issues for term assurance as the policy is treated as its open market value, which would be nil. A term assurance generally only be available to someone in reasonable health and likely to survive to the end of the term, therefore typically at the outset it will have no value. - For an existing whole-of-life policy, there can be considerations here but this would really depend on the insurance value and time where it is considered being moved into trust. Many WOL policies are established with advice at the outset so I'd hope would have been advised with the correct trust structure. **All of the above is a general comment but may not be accurate to your circumstances. This can be a complex area and well beyond the scope of what I could cover with a comment, so if anyone is considering planning in this area, they should seek advice specific to them to ensure it is accurate.
@JimboJimbo-i4i
@JimboJimbo-i4i 17 сағат бұрын
That nill rate band disappearing is so annoying over 2mill
@johncook7669
@johncook7669 2 күн бұрын
Be a member of the royal family?
@PrinciplesPersonalFinance
@PrinciplesPersonalFinance 2 күн бұрын
True...
@jonh7054
@jonh7054 2 күн бұрын
Starmer and his bastard colleagues are also wealthy so there must be a loophole that they are using to escape these punitive taxes?
@Lynnpjjbdndji
@Lynnpjjbdndji Күн бұрын
Only 4% pay any inheritance tax !!!!!! Pay your tax !!!!!
@david-fletcher
@david-fletcher 3 күн бұрын
Message to young people …. UK is shite…..Leave !
@hirodaryanani
@hirodaryanani 3 күн бұрын
Agreed - and include to this “middle aged” people - not sure if Principles Personal Finance, and UK advisers like them, are ever allowed to say anything of this option. Maybe the UK is an island unto itself and not part of the continent (?)
@nasirmahmood5684
@nasirmahmood5684 3 күн бұрын
Before you leave, go explore other places. You might regret packing your bags.
@dd-ys9wi
@dd-ys9wi 2 күн бұрын
3 gone. 1 am actively pushing to Canada. £2M UK paid for their education and UK gets £0.
@david-fletcher
@david-fletcher 2 күн бұрын
@@nasirmahmood5684 I get that I agree....I just hate the way the UK civil servants just cannot be straight with people, this is why it's one big game, one side trying to catch the other out all the time....I would prob head to the US
@hirodaryanani
@hirodaryanani 2 күн бұрын
@@nasirmahmood5684 I am - currently in Cyprus - no IHT here and gorgeous sun
@evilzzzability
@evilzzzability 3 күн бұрын
A lot is being made of IHT, but it's actually the one tax that I don't really care much more - I mean, I'm not going to be the one paying it. I think it's much more fruitful to really optimize around the basics of drawing as much income at as low a rate as possible. Pensions were never intended to be a wealth pass-down vehicle, and imo it's right that they are bought into line with the rest of the tax code in this regard.
@PrinciplesPersonalFinance
@PrinciplesPersonalFinance 2 күн бұрын
I think that's a very fair and reasonable view on it. I also hear you about pensions and wealth preservation vehicles. Like all these things with taxation and governments, I think the 'goalposts moving' is unhelpful, but we have to deal with the world as it is, not as it should be.. Thanks for watching!
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