Tax Zone

Welcome to the Tax Zone. This area of the site is dedicated to keeping you updated on changes to tax legislation and its effects on financial planning. Here you will obtain detailed analysis on the budget, hints & tips and planning opportunities resulting from any changes made. This is intended to be a valuable resource for all our clients who wish to keep up-to-date and have a desire to take control of their financial affairs.

The Partnership always acts in the best interest of our clients. We work hard to ensure you receive the right advice and information enabling you to make the decisions that are best for you.

The content on this website is purely for information purposes only. Decisions should not be taken based solely on the content of the website and advice from a suitably qualified individual should be sought first.

Changes result in unexpected IHT bill

inheritence tax

Many business owners could be affected by a change in Inheritance Tax legislation. It is very common for business owners to fund their business by obtaining loans secured against their property. Due to the level of security offered by the owner, they are often able to negotiate very low interest rates making the loan a very cheap source of finance.

Historically, the loan value on the estate would be offset against the value of the property that is a chargeable asset and therefore reduce the value subject to IHT. Changes within the budget have meant that the loan is now to be offset against the value of the business only. In many circumstances, the value of the business is not chargeable to IHT so the changes result in a reduced value of a non-chargeable asset. Overall, the value of the chargeable estate is not reduced by this loan, meaning that there may be an unexpected tax bill.

What to consider:-

• If the tax is to be paid, you may wish to ensure there are liquid assets that can be sold to have the cash to pay the bill.

• Are we happy knowing that the heirs may have to sell the family home or other precious asset to fund any payment?

• As you have identified a potential tax bill, you could look at setting up a whole-of-life insurance policy that will cover the tax liability

• Considering the IHT nil rate band is in real terms reducing year-on-year, is it time to review my estate planning, wills and insurance policies?

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