It's commonly appreciated that Inheritance Tax (IHT) has a terrible reputation.
From an emotional point of view, it comes at one of the most sensitive times anyone can experience in life.
From an analytical point of view, many critics of IHT strongly argue that the wealth of an individual has already been taxed - such as by income tax or capital gains tax - and therefore taxing it upon the individual's death is doing so unfairly.
Playing devil's advocate, it's important to be aware that many have described IHT as an optional tax.
Roy Jenkins, former Chancellor of the Exchequer, once famously said that:
IHT is, broadly speaking, a voluntary levy paid by those who distrust their heirs more than they dislike the Inland Revenue
A justifiable comment, the meaning behind this is that there are numerous means with which an individual can legitimately reduce their IHT bill, often to the point where it falls under the bracket with which it needs to be paid.
And it's with this understanding that we're introducing our latest guide: an investor's guide to mitigating inheritance tax through intelligence investing.
Understanding and reducing your inheritance tax liability
Within the guide, we focus on three key areas:
- Who pays Inheritance Tax?
- Understanding your Inheritance Tax liability
- Mitigating your Inheritance Tax
Within the first, we explore your likelihood of paying IHT. Touching initially on the thresholds and percentages with which IHT is paid, we go on to look at the trends in the proportion of estates that fall under IHT liability, and subsequently the average liability faced.
Moving to understanding any IHT liability you may have, the second section provides clear detail to assist you in understanding what your IHT liability could very likely be.
Based on a few key determinants (including aspects such as if you're married or a homeowner), the guide has also included some worked examples with people in different circumstances, showing the different liabilities potentially faced.
Finally, we provide an insight into some of the most effective means with which it is possible to reduce IHT liability.
Within this section, we've placed a clear focus on the incentives offered by tax efficient investment schemes, and how you can legitimately reduce your IHT bill with intelligent investing.
Is mitigating your IHT liability actually possible?
In all of the guides we've produced, we only provide information that is of genuine use.
Whether that's with a guide focused on entrepreneur's looking to raise finance, or investor's wanting to understand how they can reduce income tax through the Enterprise Investment Scheme (EIS), our guides all offer factual information that educates and informs in a way that has tangible benefits.
And our guide to IHT is no different.
As with all financial processes, mitigating IHT liability isn't as easy as ticking a box or filling in a form, but it is is a realistic possibility for most.
A prime example is through the use of Business Property Relief (BPR).
We go into this in more detail in the guide, but in essence, BPR is perfect if you're someone in later life with a large estate and are aiming to achieve IHT exemption in the foreseeable future.
There is no upper limit to the level of investment that you can make in BPR. Unlike investments in companies eligible for the EIS (limited to £1,000,000 per financial year) you can allocate as much of your estate as you like to BPR investments.
With our investor's guide to mitigating inheritance tax through intelligent investing full of information around BPR and numerous other ways to reduce your IHT bill, it's completely free to download - get your copy today.