RegulationJan 15 2016

Tax expert expects surge for inheritance tax help

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Tax expert expects surge for inheritance tax help

Advisers could see more demand for their help in minimising inheritance tax bills, according to Simon Ruthers of Oxford Capital.

The senior manager for business development at the Oxford-based tax efficient investment company, said more and more families are going to be caught by inheritance tax because of rising asset prices.

He said: “If you are a home-owner and you own an average detached house, that is going to absorb the nil rate band. If you have assets above your main residence, then you have got an inheritance tax problem.”

The Office for Budget Responsibility has forecast the number of deaths subject to inheritance tax will more than double in the period between 2013 to 2014 and 2018 to 2019, reaching 54,500 – or 10 per cent of deaths.

In October, the latest publicly available data on tax receipts showed 2012 to 2013 saw inheritance tax paid on 17,900 estates with a total bill of £3.05bn – a 15 per cent increase on the £2.65bn total paid in the previous tax year.

Mr Ruthers said while some people may not be aware of their potential inheritance tax liabilities, that would soon change.

He said: “Any family only pays a significant IHT bill once. Those families who have paid IHT at some point are very aware of the issues.

“A significant part of the dialogue we have with advisers is around education and increasing the level of understanding.”

He also expressed scepticism about relying on pensions as an estate planning tool following the government’s decision to scrap the 55 per cent so-called “death tax”.

Mr Ruthers said people need to be mindful of the fact pensions are useful in this respect, but there are limitations on what you can do with them. “One of the things you cannot do is chuck a lot of money into your pension when you are 85 because you haven’t got any relevant earnings.”

Oxford Capital runs an estate planning service which allows people to shelter their IHT liabilities through business property relief. This means that if the shares are owned for two years and are still hold on death, they could qualify for 100 per cent relief from IHT.

Mr Ruthers added that since the product’s launch 18 months ago more than £10m has flowed into it.