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250,000 families face inheritance tax collection – but there are loopholes

House price inflation is a major factor in the surge in IHT income.of The average property in London is now worth £526,842, according to the Halifax Home Price Index. However, his primary IHT allowance and family housing allowance are fixed at £325,000 and £175,000 respectively, giving the individual £500,000 of his non-IHT allowance, Still not enough to cover average London property prices.

But the family was handed the most important IHT giveaway in years. Mr Hunt announced last week that he would end his £1,073,000 pension for life..

Inherited pensions may be subject to income tax, but families often forget that pensions are not covered by the IHT. The abolition of the LTA means that the family can technically have an “unlimited” amount stash without his IHT, only through an annual allowance that Mr Hunt has increased from his £40,000 to his £60,000. Limited.

Dean Butler of annuity firm Standard Life said the removal of lifetime benefits had “overheated” the appeal of pensions as a means of passing wealth from generation to generation.

Tom Selby of investment platform AJ Bell said using annuities to avoid IHT would be “easy” for savers. “Money left in the pension will go to the designated beneficiary without her IHT and will be completely tax-free if she dies before turning 75.”

There are several reasons why saving for a pension is more attractive than other strategies for avoiding IHT. For example, investing in assets or setting up trusts that are subject to “business bailouts”.

“Trust arrangements can be complex and difficult to navigate, but leaving annuities to beneficiaries is a straightforward process when done right,” said Andy Butcher, wealth manager Raymond James. There is also the added benefit of tax relief when adding to the annuity, versus a potential tax of 20% when setting up the contract.”

Money held in eligible stocks listed on the alternative investment market is not eligible for IHT. However, investing in these companies involves risk.

Jason Hollands of platform Bestinvest said regulatory requirements for companies listed on Aim are much simpler than on FTSE’s main market, making prudent investment choices a minefield for investors. said to be sexual.

“While Aim has certainly had many significant successes, such as Fevertree Drinks and video game group Keyword Studios, there have also been many failures over the years, such as ScotOil Petroleum, Patisserie Valerie, and beverage wholesaler Conviviality. If you invest directly in Aim stocks, you really have to know what you’re doing and you have to be selective,” Hollands said.

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