Inheritance Tax Solutions - 2-Year Exempt Plan with Capital Preservation Objective
How can I protect my assets from IHT but still have access to all the capital and have an income in a low risk environment (without involving a Trust)?
- Mr Jones is single and has an estate (including house, investments and savings) of £1m
- He is 88 years old and is thinking of ways in which he can minimise his Inheritance Tax bill
- Mr Jones does not wish to lose access to or gift any capital.
- Mr Jones wishes to continue to receive income from the investment.
- If Mr Jones does nothing, his Inheritance Tax bill will be £200,000, equivalent to almost 25% of his assets
- Mr Jones is content with his assets’ value and is not in need of high growth and does not wish to take much risk
- Assume Mr Jones benefits from new additional Residential Nil Rate Band of £175,000 at death
- Mr Jones to invest £300,000 into a specific Inheritance Tax Plan.
Benefits from advice given:
- After holding the investment for two years, Mr Jones’ investment is removed from his taxable estate.
- Mr Jones can continue to hold the investment himself for his lifetime.
- As the Recommended Plan has built-in flexibility, should Mr Jones need to withdraw money before he dies, he can do so without affecting the Inheritance Tax relief he will receive on the remaining amount in the investment.
- By removing the investment from Inheritance Tax Mr Jones has potentially eliminated a significant part of his Inheritance Tax bill (i.e. a saving of £120,000)
- The plan aims to achieve a net return of 3.1% per annum which can be added as growth or taken as income
2-Year Exempt Lower Risk Plan:
Assumes the investment is held for a period of at least two years and still held at time of death.
This table is for illustrative purposes only and does not constitute advice.
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This example is for illustrative purposes only, based on current legislation and tax allowances. Tax rules and regulations are subject to change.