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Tax Planning

Inheritance Tax and Crocodiles …

What is Inheritance Tax? According to the dictionary, it is “a tax paid on money or property you have received from someone who has died.” Your next question may well be “will it affect me?” The answer to that is, if on your death, you leave an estate of over £263,000 (the current nil rate limit, which tends to change each year), and you are unmarried, or married and are leaving your estate to beneficiaries other than your spouse, YES. How much? The rate on all assets deemed part of your estate, and over the £263,000 level, is 40%. As an example, if you leave an estate of £800,000, and assuming normal levels of planning (i.e. very little!), your estate will suffer Inheritance Tax of £214,800. This is, effectively, a party political donation to the Chancellor of The Exchequer, who, at the time of your death, may or may not be from the political party that you support!

Inheritance Tax is avoidable, and voluntary, not least as you can easily mitigate against it. Most people really dislike talking about or even planning for what happens when they die, but it is one of the two certainties in life that we will die (the other being that we will pay tax at some point).

Why Crocodiles? Crocodiles are avoidable (especially in East Anglia), but, should you not plan well enough to avoid one, it will usually take 40% of you in one go! Not unlike Inheritance Tax ….

Simon Gibson, Director of Atkinson Bolton Consulting Ltd, says “We are always helping clients that need professional, specialist estate planning advice, and we work closely with their other professional advisers (Accountants, Solicitors etc.) to provide a strategy to protect that estate now, and on death. By doing this, we can usually safeguard the value of their accumulated wealth for their beneficiaries, who don’t usually include The Chancellor of The Exchequer!”

Simon Gibson goes on to suggest some questions that you should ask yourself before putting in place a plan or strategy to mitigate Inheritance Tax, and they include:

  • Who do I want to benefit from my estate when I die?
  • Am I prepared to lose access to some or all of my estate now, to help to mitigate Inheritance Tax?
  • Do I have an up-to-date Will, that includes sensible Inheritance Tax mitigation measures?
  • Am I prepared to pay something now or on an ongoing basis to mitigate Inheritance Tax?

November 2004

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Atkinson Bolton Consulting Ltd, is authorised and regulated by the Financial Services Authority and

is registered in England at Cheveley House, Fordham Road, Newmarket, Suffolk CB8 7XN, registration number 4127134 and VAT number 765637296.

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