Understanding inheritance tax

Clients are often concerned about the tax bill that unfortunately comes hand in hand with inheritance. But there are solutions that can result in a greatly reduced tax bill and can even ensure you still benefit from your assets before they are passed to loved ones.

For example, over the years one of our clients had built up a significant property portfolio and was concerned about the potential Inheritance Tax in the event of his death.

He was aware that if he made gifts of the properties to his adult children and survived for seven years thereafter, the value of the properties would fall out of consideration for Inheritance Tax purposes. But these gifts would still create an unwelcome Capital Gains Tax liability based on their current market value.

Mr Smith was currently letting the properties and wanted to continue receiving the rental income that was being generated from them.

We were able to suggest a solution which ensured that Mr Smith and his wife could continue to enjoy the rents from the properties, the value of the properties would fall out of consideration for Inheritance Tax after seven years, and no Capital Gains Tax liability would arise.

If you have any concerns regarding potential Inheritance Tax liabilities, please contact Lewis Van Emden on 01443 841184 lewis@obrienandpartners.co.uk .