The importance of tax efficient estate planning
In the next 5 to 10 years alone, an estimated £1.2 trillion is expected to pass down through the generations, from those who were born before the mid 60s – and between now and 2050, that figure will rise to £5.5 trillion. The average ‘estate’ is also becoming more valuable, primarily due to the disproportionate increase in property prices over the last few years.
All of this means that the subject of tax-efficient wealth transfer is becoming increasingly high profile, and something which can no longer be ignored. It’s vital that members of the so-called ‘Baby Boomer’ generation, and those born previously, start to think about how they can maximise any legacies they are leaving – to reduce or remove inheritance tax for their beneficiaries wherever possible.
To find out more about how inheritance tax is calculated, please click here.
Over a million adults receive an inheritance in any given year
In the UK, over 70% of household wealth is held by those who are 50 or older
The value of the average inheritance will increase from £62,000 to £91,000 between now and 2030
Between 1995 and 2015, household net worth in the UK rose from £2.8 trillion to £10.2 trillion
Between 2012 and 2014, the amount of money which was transferred between generations rose from £49bn to £59bn
On average, property is expected to account for over 70% of each inheritance over the coming years
How Stellar Asset Management can help
This unprecedented inheritance boom is mainly being driven by the huge increase in house prices, meaning that many estates will now add up to a higher value than the inheritance tax threshold of £325,000 per individual. As a result, more and more households are having to pay inheritance tax, which is currently 40% on everything over the threshold. To illustrate this more clearly – £5,400,000,000 was paid in inheritance tax in the UK during the 2017/18 financial year.
At Stellar Asset Management, our aim is to ensure that each family can legally transfer the maximum amount between generations, without paying unnecessary inheritance tax. We achieve this by taking advantage of something called Business Relief (BR), which was established by the government in 1976.
This enables any individual or business owner to achieve full inheritance tax relief in just two years, rather than having to wait seven years for inheritance tax relief using traditional trusts or gifts – which is the more widely known route. We achieve this through carefully constructed portfolios which have been created specifically for the purpose, investing exclusively in business activities that qualify for Business Relief.
Next steps for investors
Stellar Asset Management offers a wide range of inheritance tax services that invest exclusively in business activities which qualify for Business Relief – to provide full relief from inheritance tax after just two years. This one of the most effective ways for individuals and business owners to ensure that the maximum amount can be passed on as an inheritance.
We work primarily through financial advisers, but also directly with more experienced investors. To find out more about our individual Inheritance Tax Services, please use the following links, or get in touch with us today.