Increasing Property Values Can Seriously Damage Your Wealth

With house prices increasing dramatically in the South West, and particularly in Falmouth and Penryn, many more people are pushed into a potential Inheritance Tax (IHT) position or, if already there, their potential IHT liabilities are rocketing. This could mean that the wealth you would hope to pass on could be reduced by a much larger tax bill than before.

IHT becomes payable on gifts or estates worth over £312,000 and tax is charged at 40% on the value in excess of this amount on death, or 20% if a chargeable lifetime transfer.

We can best illustrate this by the following:

Example A

Example B

£

£

Own Home

Home Contents, Car, Personal Possessions,etc

Investments, Life Policies, Cash on Deposit, etc

300,000

50,000

50,000

450,000

70,000

130,000

Total Value of Estate

400,000

650,000

less

Current Maximum Exempt Amount
Effective from 6 April 2008

Liable to Tax

(312,000)
.

88,000

(312,000)
.

338,000

Tax Payable @ 40%

35,200

135,200

These examples show that instead of passing on wealth of £400,000 or £650,000, upon death you would only pass on £364,800 or £514,800 after IHT.

The good news is that with careful planning, your IHT liabilities can be substantially reduced or eliminated altogether. This is principally achieved by ensuring that you have a properly structured Will and by utilising lifetime gifts.

We will not go into details at this stage, but we would ask that you seriously consider this matter. After all, why should you have worked hard all your life to be where you are today, only to leave a substantial part of your wealth to the government tomorrow?

If you would like to discuss this matter further, then please contact one of the partners, Robin McGregor or Alisdair Hall.

The content of this fact sheet is for information purposes only and should not form the basis of any decision as to a particular course of action. No responsibility can be taken by Boadens for the accuracy of the information contained in this factsheet or for any loss incurred in acting or failing to act as a result of information contained within.

The factsheet does not constitute legal, accountancy or regulatory advice. Specialist advice should be sought in relation to your own circumstances.

© Boadens, March 2008

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